Oil prices fell on Tuesday trading after crude production increased from most of the oil-exporting regions worldwide.
This increase in output not only undermines the effectiveness of the OPEC’s decision to cut oil production last week, but also generates anxiety among investors that oil-glut may continue next year.
International Brent crude oil futures LCOc1 traded at $54.64 a barrel, down by 30¢ from yesterday’s prices. US West Texas Intermediate crude fell by 40¢ to reach $51.39, Reuters reported.
Saxo Bank head of commodities strategy Ole Hansen said: “Most of the position adjustments that the OPEC decision forced upon traders have now run their course and it leaves the market exposed to profit taking.
“What's troubling is that the rise is coming from African producers, two of which are exempt from cutting production. The meeting on Saturday between OPEC and non-OPEC producers will be crucial in order to maintain the bullish sentiment seen since last Wednesday."
Last month, the oil output from OPEC countries increased to 34.19 million barrels per day (mbpd) from 33.82mpbd in October.
Russia also reported to produce 11.21mbpd last month, which is its highest rate of production in the last three decades.
OPEC countries and Russia earlier agreed to reduce oil production in the first month of next year, which increased crude oil prices by 10%.