Crude oil tumbles after hitting record highs

Highlights

  • Crude oil prices tumbled on Thursday.
  • Winter weather in most parts of the US is expected to be warmer than average.
  • Oil also came under pressure due to a drop in natural gas and coal prices.

Crude oil prices tumbled on Thursday after a forecast for warm winters in the US put the brakes on crude oil’s rally that has brought oil to nearly three-year highs.

December delivery Brent Crude oil futures last traded at US$83.06 per barrel up 0.68%, whereas December delivery WTI crude oil futures traded 0.58% up at US$82.98 per barrel as of 22 October 2021 at 12:17 PM AEDT.

What led to Price Drop?

Oil prices plummeted over concerns that the Winter weather in most parts of the US is expected to be warmer than average, as per the records of the National Oceanic and Atmospheric Administration.

The drop followed a Crude oil price rally on Wednesday after the US Energy Information Administration stated that the crude inventories in the US tumbled significantly to three-year lows.

OPEC

OPEC | Source: © Gumpapa | Megapixl.com

Terrific oil’s rally

The recent surge in the crude oil prices was underpinned by the decision of the Organization of the Petroleum Exporting Countries (OPEC) and its allies together known as OPEC+ to stick to their original plan of increasing the output gradually as per the plan in July 2021. The group agreed to increase the production by 400,000bpd per month till April 2022 to phase out the existing cut of 5.8 millionbpd.

Oil also came under pressure due to a drop in natural gas and coal prices. In China, the prices of coal tumbled 11%.

Bottom Line

Crude oil prices tumbled significantly after hitting multi-year highs followed by a warmer weather forecast in the US.

Comment


Disclaimer