BRENT crude oil futures stabilised yesterday, rising by $1 after falling to a two-year low earlier in the week. Brent, the international benchmark, fell to $94.67 (£58.52) per barrel on Tuesday. The drop marked a 16 per cent loss for the quarter, the biggest in two years. US crude also fell to a two-year low.
Analysts pointed to the increasing strength of the dollar as a problem facing oil prices. Malcolm Graham-Wood, oil analyst at HydroCarbon Capital, said the main factor in price weakness was oversupply for the past few months. “It really began in June when the problems with Isis in Iraq started,” he said.
“The Saudis increased production dramatically because they expected Iraq to stop – but they didn’t.”
Graham-Wood added: “Since September, Opec have been producing over their limit and with the US production going back up and Libya coming back on stream, the demand just hasn't picked up at all.”
On Tuesday it was reported that Opec’s production increase had been led by a rebound in Libyan output to the highest level in more than a year.