Earlier today, oil prices dropped to yet another 14-month low as the markets were concerned that a slowdown in the economy of the United States of America could have an effect on the demand.
The United States of America is now considered as a net oil exporter. According to official data, it is expected to pump a record amount of shale oil. Last Monday, the Energy Information Agency of the United States said that shale oil production of the Us is expected to increase to 134,000 barrels m/m to 8.166 million, the first timethat the monthly average will have exceeded 8 million.
The price of Brent crude standard declined by more than four percent to breach the $55 per barrel mark. It fell to as low as $54.82.
The speculators were alarmed after international markets dropped on the decision of the US Federal Reserve to increase the interest rates.
This morning, the FTSE 100 dropped to its lowest level in more than two years after the release of the news.
An analyst at City Index, Fiona Cincotta, stated: “Brent crude has lost […] in early trade on concerns that US demand will decline if the economy there starts weakening next year and on concerns that the US China trade dispute will continue to affect Chinese demand.”
She added: “It will be hard for oil to turn the corner while US equities are falling but if the US stock markets stabilise Brent and WTI could also settle on a flat or a marginally upward trajectory.”
Meanwhile, the US standard West Texas Intermediate dropped by around four percent to $46.26.
The chief oil analyst at consultancy JLC, Xi Jiarui, stated: “Investors quickly moved their attention to deteriorating fundamentals in the oil markets, including more signs of slowing economic growth next year, record production and the lack of confidence with Opec’s pledge to curb production.”