This week marks the worst performance of oil prices after its recovery above $50/bbl. Brent crude fell from $46/bbl to around $42/bbl. The sharp fall in oil prices at the beginning of the week was driven by negative oil market sentiments. Last week data that showed a continuous increase both in U.S. Crude oil production and rig count along with a slow decline in U.S. crude oil inventories weighed on oil prices earlier in the week.
But the fall in oil prices accelerated after the EIA reported a sudden increase in U.S. crude inventories. U.S. crude oil inventories increased by 1.6 million barrel last week as reported by the EIA. Following the news, Brent crude fell close to $42/bbl before it settles up on Friday amid weaker U.S. dollar and short-covering after a week-long of selloff.
Regardless of the slight increase in oil prices on Friday, the pressure is still on and prices may fall a little bit lower next week. This week data by the EIA and Baker Hughes rig count showed an increase of 21000 barrel in U.S. crude oil production and an addition of one rig. Both these data along with the increase in U.S. crude oil inventories will weigh on oil prices next week.
