U.S. crude oil prices have fallen more than 2% to their lowest levels in six weeks, as concerns about oversupply and slowing global demand continue to weigh on the market.
The price of West Texas Intermediate (WTI) crude, the U.S. benchmark, fell to $64.64 per barrel on Thursday, its lowest level since early April. Meanwhile, Brent crude, the international benchmark, dropped to $68.63 per barrel.
The decline in oil prices comes as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, are gradually increasing production levels after implementing deep cuts last year to support prices during the pandemic-induced downturn.
Additionally, fears about a resurgence of COVID-19 cases in some parts of the world, particularly in India, have raised concerns about the pace of the global economic recovery and its impact on oil demand.
The recent decision by the Biden administration to lift sanctions on Iran’s oil exports, if a nuclear deal is reached, has also added to the pressure on oil prices. Iran, which has one of the world’s largest oil reserves, could potentially flood the market with additional supply if sanctions are lifted.
Analysts believe that the combination of these factors has created a bearish outlook for oil prices in the short term, with the potential for further declines if demand fails to pick up as expected.
Despite the recent decline in prices, some analysts remain optimistic about the long-term outlook for oil, citing the ongoing global economic recovery and the potential for increased demand as vaccination efforts continue to progress.
However, the uncertainty surrounding the trajectory of the pandemic and its impact on the global economy will likely continue to influence oil prices in the coming months.
In conclusion, the recent drop in U.S. crude oil prices to their lowest levels in six weeks reflects ongoing concerns about oversupply and weakening demand. While some analysts remain optimistic about the long-term outlook for oil, the market is likely to remain volatile in the near term as uncertainties persist.