Production cuts lowered crude prices
Crude oil prices reached an almost one-week dip in Asian trading on Tuesday, as more fresh supplies are expected to hit the market following weak production activity in China.
On the New York Mercantile Exchange, sweet, light futures for March delivery traded at $31, down 0.61 the lowest value since Wednesday. Meanwhile, on London ICE Futures exchange crude oil sagged 1,8% or $0.63, thus hitting $33.61 a barrel, the lowest price since Thursday.
The given mismatch between oil demand and supply has affected prices for about two years. As analysts state, a price correction could take place in the second half of 2016, as they’re looking forward a number of high-cost producers to stop production for the purpose of averting operational losses or debt defaults.
The upturn in oil prices is still fragile amid the slowing global economy, to say nothing of concerns regarding effectiveness of policy measures for commodity demand.
Goldman Sachs appeared to be one of the first to foresee a drop to $20 a barrel right before a turnaround for oil. The bank repeated its prediction on Monday and pointed out that a near-term collective decrease by Russia as well as main Middle Eastern producers would be unreal.