The International Energy Agency (IEA) said that stockpiles of oil has reached a record at just over 3 billion barrels. This news and the predictions that the glut will continue into next year has had a negative impact on stock markets around the world. The FTSE 100 has fallen by 1% following falls in the European and Asian stock markets. The Honk Kong index slid by 2.2%.
Much to the consternation of the Scottish Oil industry, oil prices continue to fall world-wide. In the past 18 months the price of a barrel of crude oil has almost halved to around $43 (Brent crude stands at $44.64 and US Crude at $42.13 today). The price fall has been attributed initially to “soaring North American crude production” but also to the over-supply from the OPEC cartel and US shale oil production. They are not alone, Europe, Russia and China are all overproducing.
Although these lower prices may lead to a lowing of production eventually, it may take months to clear the results of the over production. There may be a silver lining to this cloud according to the IEA who stated “This could protect the market from a supply crunch should there be a lengthy spell of cold temperatures. But the current forecast is for a mild winter in Europe and the US. If it turns out to be true, bulging stock levels will add further pressure and oil market bears may choose not to hibernate.”
A small increase in the price of crude oil was seen today, but the speculators are looking at the oil glut as a long-term problem.
