Global Brent Oil Experiences Double Digit Dip

by Milos Bezanov

Global oversupply in Brent Oil and West Texas International (WTI) leads to price dip, U.S. Shale survives price slash. Effects of global oversupply and market saturation of Brent Oil a growing problem, according to Goldman Sachs and Morgan Stanley analysts, Reuters.

“We have brimming oil inventories in Europe…and our predictions are that oil inventories in Asia are going to get closer to saturation in the first quarter” said Bjarne Schieldrop, chief commodity analyst at SEB in Oslo
Oil dependent countries such as Russia and Venezuela, along with shippers and private oil drillers are affected by the “race” between Middle East oil producers and U.S. shale which led to a 35% dip, “the lowest since 2004”, according to the BBC.
Despite sinking to $36.10, Brent oil rebounded to $37.28, while WTI went from $34.17, its lowest since 2009 to $34.07 a barrel.

Government impact

Growing output from the OPEC countries, Russia and U.S. shale producers overtook demand while the U.S. “repealed a 40 year ban to export crude oil to countries outside of Canada” Reuters
U.S. shale defied the odds, delivering more supply than expected despite ” rock bottom crude prices..and a sell off in oil that slashed by two thirds the number of drilling rigs” (bbc), leading to the legislative decision
Meanwhile OPEC agreed on production targets for in its Vienna Dec 4th meeting, yet depsite this, the organization’s effectiveness has been called into question for it’s inability to boost oil prices.
Hedge fund managers, traders and other speculators continue to benefit from low prices, but despite this producers such as Russia “show no signs” of reigning in production.