Over-supply pulls down oil prices on Tuesday. This is the third consecutive trading session that the oil market witnesses a fall.
Prices of crude oil fell down by 4 percent. Overproduction of crude oil in both Russia and the U.S. is said to be the main cause of too much of supply in the market.
Oil prices slid down in the global market. Brent crude was down by $2.41 and was quoted at $57.20. Crude had lost 4 percent touching a 14-month low.
U.S. crude oil was down by 2.04 percent and touch levels of $47.84. Previously, it had touched these levels in September 2017.
Experts feel that the market will continue to remain weak if the inventories keep accumulating from U.S. and Russia. With global growth sliding, the demand for crude oil is also declining. The holiday season ahead is another cause for the slowing demand of oil.
For the month of October and November, oil prices have declined almost 30 percent with increasing inventories. Apart from the oil market, the equity market witnesses a decline too. Investors now wait for announcements on hikes in interest rates from the Federal Reserve.
Shale from the U.S. has an output of about 8 million barrels a day and may increase even further, say the U.S. government. Production is high from Russia, the United States, and Saudi Arabia, touching almost record highs in these countries. Britain has restarted operations at its oil field after repair work on pipes has completed, adding to the oil glut.
Though OPEC producers had agreed to cut down production by 1.2 million bpd, there is still over-supply in the market, which is bringing down prices. 1.2 million bpd is almost 1 percent of the global demand for crude oil. If production is cut down together by all countries, the market will stabilize and prices may rise up again.