Adedapo Adesanya
By Adedapo Adesanya
The oil market was down on Thursday after it was reported that oil producers needed to address the daily oversupply of more than 2 million barrels.
Consequently, the international benchmark crude futures, Brent, dropped 47 cents or 1.04 per cent to $44.90 per barrel, while the US benchmark, the West Texas Intermediate (WTI) crude futures fell by 31 cents or 0.72 per cent to $42.62 per barrel.
Following a meeting by the group of oil-producing nations, the Organisation of the Petroleum Exporting Countries and its allies known as OPEC+, it was reported that they would need to slash output by an extra 2.31 million barrels per day to make up for their recent oversupply.
The surplus seen between May and July ought to be compensated for in August and September, the report said.
OPEC+ members stepped up their joint output cuts to a record 9.7 million barrels per day in May before tapering them to 7.7 million barrels per day this month.
The internal report did not say how the additional cuts would be distributed over August and September but if the 2.31 million barrels per day figure is adopted and spread equally over the two months, it would take OPEC+ oil cuts to about 8.85 million barrels per day.
Prices were also affected by firmer US dollar, this makes oil more expensive for holders of other currencies, according to analysts, this left traders stuck in a narrow trading range.
Worsening conditions in the largest economy also contributed to a bad outlook for the market as the number of new US claims for unemployment benefits rose back above one million.
The setback came a day after the country’s Federal Reserve said additional monetary policy easing may be needed because a rebound in employment was already slowing.
This did not give a chance to drops in stockpiles of crude in the United States which fell for a fourth straight week to help the market.
Crude inventories fell by 1.6 million barrels in the week to August 14 to 512.5 million barrels, less than analysts’ expectations who expected more than 2 million barrels.
