Crude oil prices take a further hit as Saudi Arabia reports a rise in production in Opec report
The price of crude oil has dropped sharply after a report by the oil producers’ cartel showed rising volumes being extracted in Saudi Arabia.
Production of crude oil by Saudi Arabia rose by 263,000 barrels per day in February compared to the month before, according to the directly communicated figures reported in the monthly report by Opec (the Organization of the Petroleum Exporting Countries).
Futures for West Texas Intermediate (WTI), the US benchmark, fell below $48 (£39.2) per barrel for the first time since the end of November, when Opec managed an historic agreement to limit production.
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Meanwhile the price of Brent crude, the North Sea benchmark, fell to lows of $50.6 (£41.4) per barrel.
WTI futures prices rose as high as $56.92 per barrel in January, but have since come under pressure as US producers, which are not part of Opec, responded by raising inventories.
Last week prices fell by the largest amount this year as the US Energy Information Administration reported crude oil stocks well above analyst forecasts.
The prospect of lower growth from China has also weighed on prices, as the market adjusts to structurally lower demand from the world’s second largest economy.
The rise in Saudi Arabia’s production means the total from Opec countries which reported this month rose by more than 78,000 barrels per day. However, secondary sources said total production had fallen by 139,500 barrels per day.
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Saudi Arabia is the key member of oil cartel. It produced more than 10m barrels in February according to the directly reported figures, after cutting production to 9.7m in January. The next nearest oil producer in Opec was Iraq, which produced 4.6m barrels during the month.
Saudi energy minister Khalid Al-Falih said he was "committed and determined" to stabilising the global crude market.
In an effort to dispel market concerns, he said the "difference between what the market observes as production, and the actual supply levels in any given month, is due to operational factors that are influenced by storage adjustments and other month to month variables."
Saudi production cuts in January were greater than needed to hit the target, the International Energy Agency (IEA) said last month, before the swing back in February.