Crude oil prices dropped after two consecutive weeks of upward movement, as the global supply glut continues to affect the prices.
Although the death rate in many of the high-risk countries has dropped, the relaxation of the lockdown and restrictions by various governments may leave the global economy vulnerable to a resurgence of the coronavirus disease.
Data from oilprice.com shows that the American headline crude, the WTI dropped by 3.88% after selling for $24.49. The Brent crude dropped by 3.65% as it is selling for $29.94 per barrel of crude oil.
With the improvement in global oil demand and reduction in unsold crude inventory witnessed in the past few weeks, the oil market showed some signs that it is beginning to rebalance.
The implementation of the output cut by OPEC+ and top oil producers, which took effect from May 1, appears to be showing signs of impacting on the market just as China’s inventories have reduced in recent weeks.
The US output cuts are moving rapidly with active drill rigs falling to a level not seen before since the shale revolution kicked off at the beginning of the last decade.
According to a report from Bloomberg, an economist at Oversea Chinese Banking Corp. in Singapore, Howie Lee, said, ‘’There are definite signs of the oversupply situation easing. Today’s move looks like a slight break from overall uptrend’’.
There has been a drop in oil production globally in order to reduce a swelling supply glut which still appears to be a challenge.