The price of oil is slipping in early trade on Monday, with both major benchmarks substantially lower thanks to ongoing concerns about the state of the markets supply and demand issue.
Around 8:20 a.m. BST (3:20 a.m. ET) US West Texas Intermediate crude is down more than 1% to trade at $48.57, while Brent crude, the international benchmark is just hovering above $50 per barrel, down 0.89% to $50.09. Here’s how both benchmarks look this morning:
The sell-off is a continuation of the weakness seen in the markets on Friday, when oil tumbled almost 3%, as the markets continued to monitor the supply and demand imbalance that has kept oil prices subdued in the last couple of years
The U.S. Energy Information Administration said in its weekly report that crude oil inventories declined by 3.2 million barrels last week to 532.5 million. That was roughly 400,000 barrels more than the expected decline of 2.8 million barrels.
After hitting bottom in January when it slipped as low as $28 a barrel, oil has now gained nearly 80%, and there is an increasing feeling within the markets that things are starting to rebalance, which will in turn help to boost prices, although that feeling seems to have ebbed a little on Monday.
Despite oil’s recent climb, it seems likely that $50 oil may prove to be something of a ceiling for crude in the coming months, with a large number of the market’s most respected oil analysts, including Goldman, backing oil to end the year at around the $50 mark. That could cause big issues for smaller oil-producing nations, which need higher prices to make their production profitable.
That’s a view confirmed by Mike van Dulken of Accendo Markets, who said in a morning email a little earlier that: “$50 could be a tough level to surpass for Crude. While Brent is currently in a consolidation pattern (mid-downtrend) around $50, WTI has dropped back below to trade around $48.5.”