Oil prices continued to slide on Friday, 9th June 2017, adding to sharp declines from earlier this week as evidence mounted that a fuel supply overhang continued despite an ongoing effort led by OPEC to tighten the market by holding back production. Brent crude futures were trading at $47.67 per barrel at 0039 GMT, down 19 cents, or 0.4 percent, from their last close.
Traders said the price slump was a result of ongoing oversupply despite the pledge led by the Organization of the Petroleum Exporting Countries (OPEC) to cut almost 1.8 million barrels per day (bpd) of production until the first quarter of 2018.
In the United States, official Energy Information Administration (EIA) data showed a surprise build in commercial crude oil stocks to 513.2 million barrels this week. The bloated inventories are in part a result of a relentless rise in U.S. oil production which has risen by 10 percent since mid-2016 to over 9.3 million bpd.
Markets elsewhere are oversupplied, with evidence emerging that traders are putting excess crude into floating storage, a key indicator for a glut.
The Brent forward price curve now shows a clear contango shape, in which prices for January next year are $1.5 per barrel above those for immediate delivery, making it profitable to put crude into tankers and wait for a later sale.
More production is coming. Libya’s 270,000 bpd Sharara oil field has reopened after a workers’ protest and should return to normal production within three days, the National Oil Corporation said in a statement early on Friday.