In early Asian trading on Wednesday, oil prices held around multi-month lows as investors discounted evidence of strong compliance by the Organization of Petroleum Exporting Countries and non-OPEC oil manufacturers with a deal to cut global crude supply. In relevance to this, Brent LCOc1 was down by 6 cents at $45.96 a barrel. The global benchmark ended down 89 cents, or 1.9%, on Tuesday which is considered as its lowest settlement since November.
In addition, the U.S. crude futures CLc1 for August were trading down by 3 cents at $43.48. The July contract, which expired on Tuesday, settled down than 2% and also considered as its lowest since September. As such, OPEC and other oil manufacturers agreed to cut oil supply by 1.8 million barrels per day for 6 months, starting from January (2017) and compliance with the agreement has reached more than 100%.
Market analyst at futures brokerage: Fawar Razaqda of Forex.com said that the lack of positive response regarding oil prices clearly shows market participants are not convinced that the OPEC’s efforts will help boost up prices in the short-term as crude supple continues to rise in the United States. Unless traders and manufacturers see a marked reduction in crude stockpiles, the possibility of further short term falls in the price of oil cannot be solved.
In accordance to this, on Tuesday, the American Petroleum Institute said that the United States crude stockpiles had dropped more than forecast.