Crude oil prices move lower after a Venezuelan official says production may need to drop by as much as 10 percent to match consumption levels. File photo by Monika Graff/UPI | License Photo
NEW YORK, Sept. 20 (UPI) -- Further support for sentiment that energy markets have slipped back toward the supply side pushed crude oil prices sharply lower in early Tuesday trading.
A build in U.S. oil production from shale in part led to a fall from $100 per barrel in late 2014. Crude oil prices at one point this year dropped below $30 per barrel as signs pointed to anemic growth in the global economy, only to bounce back above $50 per barrel after market watchers said supply and demand were in balance.
Venezuelan Oil Minister Eulogio Del Pino told the state oil company known as PDVSA that global crude oil production would need to drop by about 10 percent, or 9 million barrels per day, in order to keep up with current demand. According to the latest figures from the U.S. government, total production for the United States this year is expected at 8.8 million bpd.
Prices moved erratically in Monday trading, but reversed course sharply by the start of trading Tuesday in New York. The price for Brent crude oil was down 1.65 percent to open at $45.19 per barrel. West Texas Intermediate, the U.S. benchmark price, fell 1.6 percent below the previous close to start the day at $43.17 per barrel.
Crude oil prices lost more than $2 per barrel last week, but recovered some ground Monday after Venezuelan President Nicolas Maduro said producers were behind action that could lead to market stabilization.
Venezuela and other members of the Organization of Petroleum Exporting Countries may consider efforts to support higher crude oil prices during meetings next week in Algeria. Del Pino's comments show a production cut may be needed to bring markets into balance. Efforts at a production freeze collapsed earlier this year after OPEC players argued over the right to defend a market share.
Prices may be fluid this week as investors watch for clues about U.S. economic trajectory from policymakers at the Federal Reserve Bank. A rate hike would lift the value of the U.S. dollar and make oil more expensive for those doing business with non-U.S. currency.
The American Petroleum Institute, meanwhile, releases data late Tuesday that may provide a short-term indication of market balance in the United States.