Oil prices on August 14-15
Commodities such as oil are under pressure to deal with the problems caused by the trade war. In this article, we will have a look at the oil prices and how it changed during the last several days. It is not a secret that the oil industry is facing issues due to the current oil prices. In this situation, regional tensions, trade war, and economic problems might result in lower oil prices. Oil-producing countries are in a tough position as they are trying to stabilize the oil market.
Oil prices on Thursday
The price of Brent crude decreased by 13 cents or 0.2% to $59.35 a barrel. It is worth mentioning that for example, on Wednesday the price of Brent crude fell by $1.92 or 3%. Meanwhile, the price of another benchmark, which is West Texas Intermediate (WTI) increased on August 15.
WTI crude price increased by 0.1% to $55.28 a barrel, which is not a lot but still is good news for the oil industry. The price of WTI crude decreased by 3.3% or $1.87 on Wednesday. This fact shows that oil prices are unstable; this might hurt the oil-producing countries.
It is not surprising that due to the trade war and other problems, the demand for oil is not going to increase in the long run. According to the International Energy Agency, oil supply in the non-OPEC countries will increase by 1.9 million barrels per day.
The oil industry and the global economy
In 2020 this number will further and will reach 2.2 million barrels per day. The IEA in its latest oil market report mentioned that in July, OPEC members produced 29.71 million barrels per day. In this situation, the oil prices are unlikely to increase as the demand is significantly lower than supply. It is important to remember that oil supplies grew primarily thanks to the U.S. shale oil production growth started to slow down.
For example, during the first five months of 2019, oil production increased by 75 kb/d. Most of the growth of oil production depends on oil produced in the Permian Basin. Without taking into consideration, the Permian basin overall oil production is facing problems.
Even the Permian basin is stagnating as oil production growth rate fell in comparison with last year. For example, in August 2018, daily oil production reached 1.13 million barrels per day. However, in August 2019 oil production decreased to 728,000 BPD which is a severe drop in oil consumption.
Oil production in North America is essential but we should take into consideration other regions as well. According to EIA oil production growth outside of the U.S. will increase from 0.21 mbd to 0.85 mbd in 2020. However, without these regions, there is a risk that predictions about the surplus might not become a reality.
As mentioned above, Brent crude prices fell on Thursday, whereas the price of WTI crude increased by 0.1%. In this situation, when oil prices fell on Wednesday, even this minor increase of WTI crude is important for the oil prices.