Oil prices have dropped to $25 a barrel due to a bigger-than-expected rise in the US inventories, subsequently increasing oversupply fears.
According to Reuters, Brent crude futures were down by $1.45 to $24.90 a barrel at 8:30am GMT. Earlier in the week, the value dropped to $21.65, its lowest point in 18 years.
Meanwhile, US West Texas Intermediate (WTI) crude futures dropped by $0.27 to $20.21 a barrel.
Industry group American Petroleum Institute (API) has reported that the US crude inventories rose by 10.5 million barrels, giving rise to heightened oversupply concerns.
Rystad Energy’s Bjornar Tonhaugen was quoted by the news agency as saying: “April will be one of the toughest months in history for oil and this is no April fool’s joke.
“The market is oversupplied in April to the tune of 25 million barrels per day. There’s nowhere to hide from this tsunami of oversupply.”
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The collapse of the supply pact led to a price war between major oil producers Saudi Arabia and Russia. The two countries have increased oil production, leading to over-production suppressing oil markets.
In addition, Saudi Arabia and other OPEC members are yet to reach an agreement to conduct a technical meeting this month.
In a report, BNP Paribas analyst Harry Tchilinguirian said: “It is very unlikely that OPEC, with or without Russia or the United States, will agree on a sufficient volumetric solution to offset oil demand losses.”