Crude Oil Is Under Intense Pressure Once Again

Crude Oil is under pressure once again. The free fall for the Crude Oil started somewhere in June when it was trading around $107 per barrel. Since then the prices are falling and now the price has touched $75 per barrel and it is expected to fall more.

Crude Oil

US crude futures are now trading at around $76 per barrel, a figure that will squeeze the profitability of shale oil producers in the US who are seen to be the biggest threat to the domination of the Organisation of Petroleum Exporting Countries (Opec) in terms of controlling the price of crude.

Tuesday’s falls were triggered by state-owned Saudi Aramco – the world’s largest state-owned oil company by production and reserves – slashing the contracted price for its sale of crude to the US. So basically the Saudis are oversupplying the market with the hope that the winter demand for oil will them out. What this means is that when the winter demand for heating oil increases this will force the price to find the bottom and start turning up.

“The focus for OPEC is really the U.S. market where the biggest source of new supply is coming from,” Ole Sloth Hansen, an analyst at Saxo Bank A/S in Copenhagen, said by e-mail. For consumers, “the continued fall in oil prices has become an early Christmas present,” he said.