For the first week of 2016, oil prices slumped hitting a low beneath 35 dollars per barrel, which consequentially raised investors’ concerns of it further declining over the upcoming days, and setting back to 30 dollars per barrel.
Oil prices are under two pressuring factors, the first being the stock market crisis in China, the world’s second to the US largest oil consumer, while the second being the increasing US petroleum reserve, especially gasoline, which in turn indicates that the oil market is still saturated with present stock.
As for oil companies, Bloomberg’s indicators, following up the market value of 61 worldwide oil companies, revealed that their enlisted companies have lost an approximate 100 billion dollars’ worth in market value for the first week of 2016, following the setback in their stocks that dropped coincidently with the falling oil prices.
Moreover, dealers ignored escalating geopolitics as well as North Korea’s announcement on nuclear weapons testing.
Many have deemed the row between Saudi Arabia and Iran as harmless to oil shipments, however it has relatively reduced the chances of reaching an agreement on production.
Conversely, crude oil prices settled on Thursday, after previously declining and almost reaching the lowest in 12 years, after crude oil market secured support from sales centers’covering procedures.
On Wednesday, focus shifted towards the American government’s figures showing an increase in petrol stocks of 10.6 million barrels last week, which is the highest recorded since 1993. Some traders said that it indicates an upcoming slowdown of demand which could result in an overflow in offered stocks.
The American crude oil also fell, USD two, settling at USD 33.97 pb, and recording the lowest since the February 2009 crash.