Oil Prices Drop Further on Oversupply Concerns

Oil prices have dropped further, adding to near 5% losses seen on May 4, as concerns about a worldwide supply glut resurfaced.

Brent crude fell 1.8% at $47.49 a barrel, while US crude dropped 2.1% to $44.58 a barrel.

Oil is at its lowest level since November 2016, when OPEC struck a deal to cut output.

Investors are worried that OPEC nations will fail to rein in output further at their next meeting later this month.

Oil prices down by about 15% since the start of the year, despite Opec’s agreement in November which cut output by 1.8 million barrels a day.

Supply is still outpacing demand, with US oil production alone up by 10% since summer 2016.

It now pumps out some 9.3 million barrels a day – not far short of the two giant oil producing nations of Russia and Saudi Arabia.

OPEC and other oil nations are meeting on May 25 where they will discuss the success of the six-month cutback and whether it should be deepened.

Russia, one of the non-OPEC countries to sign up to the cuts, gave mixed signals on May 4 about whether it would continue.

Data released on May 2 indicated US crude stocks fell 930,000 barrels last week. Analysts had been expecting a drop of 2.3 million barrels.

The fall in crude prices hit global energy and commodity stocks.

On May 4, US oil giants Chevron and Exxon Mobil were two of the biggest fallers on Wall Street, dropping 2% and 1.3% respectively.