Oil price continues descent as oversupply concerns linger

Crude oil futures have fallen so far in today’s trading, extending yesterday’s sharp declines. Prices have faced heavy downward pressure since the start of the week amid oversupply concerns and comments from OPEC that there were no imminent plans for an emergency meeting over the slump in crude prices.

Brent for April delivery had slid nearly one percent, or 58 cents, to $58.32 per barrel as of 07:56 GMT on the London-based ICE Futures Europe exchange. Yesterday, the futures contract rose briefly after the Financial Times cited Nigeria’s oil minister Diezani Alison-Madueke as saying that her country would call an emergency meeting of the cartel, should prices drop even further.
However, comments from key Gulf OPEC members indicating that production curbs were unlikely, helped drive crude prices lower. Both Nymex West Texas Intermediate and Brent crude posted losses of over two percent. According to an OPEC delegate quoted by Bloomberg, there have been no concrete discussions about holding an emergency meeting. The 12-member group is next scheduled to meet on 05 June.

April WTI futures, had shed 61 cents, or 1.23 percent, to $48.84 a barrel in electronic trading on the NYMEX in New York as of 07:56 GMT. US crude prices have extended their decline after they slid 4.6 percent last week following a report from the US Energy Information Administration (EIA) which showed that US inventories rose 7.7 million barrels to 425.6 million as of 13 February, the most in EIA weekly data beginning 1982.

US inventory data for last week is scheduled to start coming out later today, with the Weekly Statistical Bulletin from the American Petroleum Institute (API), while data from the EIA is due tomorrow. According to a report from the Economist Intelligence Unit quoted by The Wall Street Journal: “We believe that there is still enough low-cost capacity in the US to produce at lower prices, allowing supply to expand again in 2015-16, albeit at a much slower pace than in 2012-14.”
Based on the two front month contracts, Brent was trading at a premium of $9.48 to WTI as of 07:56 GMT. During the previous session, the premium hit $10.27, the highest since March 2014.