Oil prices dip after Saudia Arabia say could Increase Output to meet Demand. (Reuters) Oil prices dipped on Friday after Saudi Arabia said it was ready to raise output further if needed, potentially adding to oversupply amid a slowing global economy and halting gains made previously in the week. U.S. crude prices hit a high of $61.82 a barrel earlier this week, their strongest since May 6, as firm demand and a strong U.S. stock drawdown lifted the market.
Oil prices dip after Saudia Arabia say could Increase Output to meet Demand
But the rally was halted by a dimming global economic outlook as well as top crude exporter Saudi Arabia saying it was ready to increase its oil output in coming months to a record high to meet a rise in global demand. Despite a steadily falling rig-count, analysts said U.S. production was also likely to remain high.
“U.S. oil producers are working through a large backlog of drilled but uncompleted wells, which have a significantly lower cost hurdle to achieve production,” National Australia Bank said on Friday. “Combined with sustained strength in OPEC production, the current glut situation is expected to persist for longer than previously expected, thus limiting the upward mobility in prices for the rest of 2015 and 2016,” it added.
On the demand side, Japan’s May crude oil purchases by its big utilities fell 47.4 percent compared with the same month last year, and they also bought less natural gas and coal. Read More