Oil prices falling on supply glut

Oil prices falling on supply glut

Monday, October 27, 2014 3:50 pm

Oil prices fell on Monday as markets foresee the world’s biggest producers maintaining supplies despite a supply glut, analysts said.

Brent North Sea crude for delivery in December lost 77 cents to stand at $85.36 a barrel in London midday deals.

US benchmark West Texas Intermediate for December dropped 52 cents to $80.50 a barrel.

World oil prices have fallen by a quarter in value since June as excess supply and weaker demand led to a glut on global markets, prompting some other exporters to call for cuts in output.

Analysts said however there are no indications of a production cut, while investors were looking for further developments during a meeting of the Organization of the Petroleum Exporting Countries (OPEC) next month.

“This year, global commercial oil stocks have surpassed the 5.0 billion barrel mark, growing at a rate of 1.16 million barrels per day on average over the first three quarters of this year,” British bank Barclays said in a research note.

“Such is the surplus in the market that is weighing on prices.”

It said that “the absence of an official policy statement, especially from Saudi Arabia in response to the fall in oil prices has left a void in guidance”.

Phillip Futures trading group said in a note that “it is unlikely that supply and demand factors would change” in the coming week.

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