Oil prices slid to $45 on Tuesday as the stockpiles of crude rise again, with Libya increasing output and the US drillers increasing the rig count. The US benchmark, West Texas Intermediate crude for July delivery slid over 20 percent or 54 cents closing at $44.20 a barrel while Futures dropped 1.2 percent to $43.23 a barrel in New York, a decline from $54.45 in February. Brent declined 46 cents at $46.91 a barrel on ICE Futures Europe exchange.
Libya Plans to Boost Output
OPEC’s efforts to reduce stockpiles have been hindered by Libya who is exempt from the OPEC deal and is pumping the most in four years. Their production has risen to 900,000 barrels a day with the country’s biggest oil field, Sharara resuming production.
US Drillers Ramping-up
According to the Energy Information Administration data, the US drillers are ramping up, having increased rig count by six to 747 last week, increasing US crude production to 9.33 million barrels a day. Oil prices could be driven down further as the number of drilled but uncompleted wells increase. Estimates by the EIA are that there were 5,946 DUC’s at the end of May, with 125 additional wells drilled in the Permian Basin.
There is also an increase in the amount of oil in tankers that traders are hoarding with the low prices.
Chief commodities analyst at SEB AB in Oslo, Bjarne Schieldrop said that there is a low conviction in the market that in the second half of the year that there really will be a draw down in inventory.
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