Oil prices continue downward trend amid supply surplus, Trump pressure

The prices of oil prices slumped on Friday to the lowest levels since last year over concern of surplus crude supplies to the market.

The WTI futures contract, the New York commodities markets’ benchmark, fell nearly seven per cent while its European counterpart, Brent Crude, dropped close to five per cent.

According to analysts, high global oil production compared to demand was the top reason for Friday’s selling, just as the outlook for a weakening world economy led investors to conclude that growth would not be strong enough to soak up the surplus.

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“The truth of the matter remains that rising global crude supply coupled with worrying signs of slowing demand have written a recipe for disaster for the oil markets,” Lukman Otunuga, a research analyst at FXTM said.

There are expectations that the WTI may fall to as low as $50 in the near future since a December OPEC meeting is not expected to make a major dent in production levels, Otunuga said.

By the mid-European afternoon, WTI was just below $51 and Brent just under $60.

Some analysts however insisted that US President Donald Trump also had much to do with falling oil prices.

An analyst with City Index trading group, Fiona Cincota also posited: “Although most analysts claim that this has to do with supply overhang and increased production from Russia and Saudi Arabia, the bottom line is that the US President keeps pushing for lower prices.

“While this is the case it will be difficult to see a return to oil at a higher level unless oil cartel OPEC decides on a major output cut at its next meeting on December 6.”

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