Oil prices fall to three-month lows on rising US inventories

 
Courtney Goldsmith
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WTI oil prices fell below $50 a barrel last week (Source: Getty)

The price of oil fell to a three-month low today as more data showed US inventories are rising.

Since last Monday, the price of oil has fallen more than eight per cent, after its biggest week-on-week drop in four months.

Brent crude, the global benchmark, fell to a session low of $50.85 a barrel today, while West Texas Intermediate prices dropped to $47.90 a barrel.

Read more: Oil prices are below $50 a barrel and still falling

On Friday Baker Hughes said US drillers added oil rigs for the eighth straight week, taking the total to 617, the highest number since September 2015.

The Organisation of the Petroleum Exporting Countries (Opec) plans to reduce oil production from its member countries by around 1.8m barrels per day (bpd) to prop up prices and cut the global glut.

Despite the cartel reaching record compliance with its proposed cuts, there has been been little impact on inventory levels, with three of the last four weeks showing substantial increases.

Craig Erlam, analyst at Oanda, said: "Of course, these changes take time to have an impact and non-Opec compliance is still a little low, but with an extension to the deal in doubt, prices are reverting back towards pre-deal levels, although I doubt we’ll get close to the lows any time soon."

Russia's top oil major, Rosneft, today warned the US' oil output recovery could deter Opec and non-Opec producers from extending production cuts beyond June and could lead to a new price war.

Goldman Sachs said in a note it remained "very confident" about commodity prices and maintained its price forecast of $57.50 a barrel for WTI in the second quarter.

Read more: IEA: it's inevitable that oil prices will spike

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