Crude Futures Pricing Affected by Supply and Rig Increase in the US
Many investors hoped that the OPEC and non-OPEC agreements to cut the production of crude oil would have a positive impact on the price of crude futures. This isn’t what is happening, as the rig count in the United States has increased again.
Overall Increase in U.S. Rig Count
Rig counts increased in Louisiana, North Dakota, Alaska, Texas, Oklahoma, and New Mexico. Other states reported no change in the rig count, but West Virginia, Arkansas, and Colorado all reported a decrease. All told, the United States rig count was 712, which is up by almost 100 rigs since last year at this time when the count was 619. This increase isn’t helping the price of crude oils.
Crude Future Prices Suffer on Increased Output
Currently, the price of WTI settled at $53.17 per barrel on Jan. 27. This is a gain of 1.4 percent from the beginning of the week, but it was down from a high that was $.63 greater on Thursday, Jan. 26. Keeping an eye on the supply that is coming from the U.S. will be important in upcoming weeks.
The price of Brent crude futures was down for the week by 1.3 percent to $55.49. This fluctuation seems to be partially because the demand for gasoline is on the decrease. Add in the increased production in the U.S. and an uncertainty about how the production cuts are faring and you have a recipe for a potentially volatile situation.
Where Are Crude Futures Heading?
Industry analysts seem to agree that crude futures prices are in a holding pattern. You can expect to see smaller fluctuations as the market adjusts to the supply variations that are currently occurring around the world.
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