Oil prices sink even further as glut worries return
The government on Friday decided to increase petroleum prices from August 1 even though oil prices fell further towards the $40 mark in Asia on Friday, extending losses to a seventh-straight day on renewed worries about a global supply glut and increased production.
The gas companies in Pakistan have also demanded an increase in gas prices.
A summary in this regard has been sent to the Finance Ministry. Price of Petrol has been raised by Rs 2.12, High-Speed Diesel by Rs 0.26 while price of Kerosene will be increased by Rs 3.94, the Oil and Gas Regulatory Authority (OGRA) said. Price of High Octane will be reduced by Rs 0.60 and Light Speed Diesel by Rs 1.24.
On the other hand, gas companies have also demanded an increase in gas prices by Rs 18 to 17 per MMBTU. Sui Southern and Sui Northern gas companies have said that OGRA should increase the price with effect from July 1.
OIL SLIPS GLOBALLY:
The commodity has slipped nearly 20 per cent since its 2016 peak above $50 in early June as the crucial US holiday driving season comes to an end and temporary disruptions to output in Canada and Nigeria ease.
At about 0320 GMT, US benchmark West Texas Intermediate was down seven cents to $41.07 a barrel while North Sea Brent was down five cents to $42.65.
“There is too much oil in the market, there’s an incredible amount,” Jonathan Barratt, chief investment officer at Ayers Alliance Securities in Sydney, told Bloomberg News.
“Oil is in a range of $40 to $50 a barrel and prices below $40 a barrel are going to be a problem.”
On Wednesday the US Energy Information Administration reported the first increase in US commercial crude stockpiles since May, adding that inventories were 13.4 per cent up on-year and gasoline stocks were 11.8 per cent higher. Supplies are now at levels not seen for two decades.
Adding to downward pressure on crude is a slow but steady rise in the number of rigs coming back online in the United States. Companies were forced to shut installations earlier this year as prices sank to near 13-year lows below $30.
But the rise in recent months has led them to reopen the rigs as they become more cost-effective.