Oil prices are falling again Tuesday, after sliding sharply Monday. The downward pressure comes as output of the valuable commodity is rising in Libya, Russia and Saudi Arabia, at a time when reports suggest the US is considering tapping into global oil reserves.
Concerns on the demand side are also weighing on oil prices, amid concerns over the pace of global growth following a slowdown in China and a weaker IMF outlook elsewhere.
Against that backdrop, the price of Brent crude oil is falling yet again Tuesday and is 0.24% lower at $71.67 per barrel. The price of US WTI crude, meanwhile, is 0.28% own at $67.87.
Oil supply seen on the up
A number of recent developments suggest that the level of the supply of oil is set to increase in the coming months. Not only has Libya re-opened most of its major oil export ports, but Russia is said to be increasing its output in the third quarter. In addition, Saudi Arabia is already producing larger amounts of the commodity.
And that’s not all, a WSJ report Friday said that US president Trump’s government is considering releasing some oil from the US Strategic Oil Reserve.
US Treasury Secretary Steve Mnuchin also told reporters that although the US Iraq sanction include that oil importing countries cut their use of Iranian oil to zero, some countries could get a waiver over that rule.
Demand to slow?
Of course, the price of oil doesn’t only rest on the supply side of the valuable black liquid. Influences over demand also play an important part.
Right now, however, there are concerns that demand could be set to ease, too. That view follows a slowdown in China GDP growth in the second quarter – albeit an expected one. The IMF has also warned that economic growth is set to slow in the euro are, Japan and the UK.
Meanwhile, a variety of interested parties suggest that the ongoing trade disagreement between the US and China could work to hamper economic growth, too. And, when economic expansion slows, demand for commodities such as oil tends to slow, too.