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Oil Continues Its Slump on OPEC Supply Rise Concerns

May 28, 2018 at 12:54 by Matt Jackson

The threat that OPEC nations, led by Russia, could increase their output in coming months, has caused oil prices to slip even further today. All signs currently point to supply levels increasing, with Russia and Saudi Arabia looking likely to increase their supply levels, and data showing an increase in the number of active US rigs. Although oil is not trading in the USA today, to mark Memorial Day, it is being traded elsewhere around the world, and the underlying sentiment is one of boosted supply levels.

OPEC and non-OPEC members agreed, in November 2017, to extend a deal that would see them curb oil supply. They made the deal in light of oil prices plummeting as a result of oversupply. However, when they made the deal, they agreed that they would reverse the decision if the market overheated.

Oil saw its first weekly loss in just over a month, last week, as prices fell nearly 5%. Brent crude had reached a high, trading at over $80 per barrel. However, a report from the EIA that there had been an increase in the crude stockpile, and rumors that OPEC would increase the amount of oil it supplies to the global market, brought oil prices down towards the end of the week. This trend has continued on Monday.

The rumors have gathered a head of steam. Various sources have suggested an increase of anywhere ranging from 300,000 to 1 million barrels a day, representing a significant shift in the total global supply.

WTI crude prices were down 1.4% to $66.93 while Brent crude fell 1.32% to $75.46 at 13:45 GMT.

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