Oil prices have plummeted below $55 per barrel

 
Courtney Goldsmith
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Oil dropped after an initial rise this morning
Oil dropped after an initial rise this morning (Source: Getty)

Oil prices plummeted to below $55 per barrel this morning after an initial increase.

West Texas Intermediate crude and global benchmark Brent futures were trading down as much as 1.5 per cent this morning.

At the time of publishing, Brent was down 83 cents to $54.64 per barrel while WTI futures were down 67 cents to $51.69 per barrel.

Read more: Oil prices are up on the back of the weak US dollar

US shale production is set to increase by 40,750 barrels per day (bpd) in February to 4.748m bpd, according to the US Energy Information Administration. In January, the rate was expected to drop by 5,900 bpd.

"US oil has been supported by considerable weakening in the US dollar over the last 24 hours," said Ric Spooner, chief market analyst at CMC Markets in Sydney, according to Reuters.

"There are two or three key things to watch: US production numbers are important, given the sharp rise we have seen in output. Another issue on the supply side is any news on Opec countries unwinding their production."

The Organisation of the Petroleum Exporting Countries (Opec) has set a commitment of cutting oil output by 1.2m barrels a day to bring supplies back in line with consumption.

Read more: OPEC: 50% Compliance To Output Deal Is ‘Enough’

Saudi Arabia has said it would adhere to the cuts, and Russia and other non-Opec countries have agreed to cut oil output by nearly 1.8m barrels per day for six months initially. However, US oil production is set to rise to 9m barrels per day.

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