03/09/2016 by Richard
Oil prices fell on the morning of September 1, due to growing fears that oil reserves are still way too high globally, along with the neutering effect of a strong US dollar.
Brent crude was 37¢ down from the previous day’s closing price of $48, whilst West Texas Intermediate was down to $46.14 – a drop of 21¢ on the previous day’s closing figure.
Despite the fact that the oil price has once again dropped, oil has made its highest one-month gains since April, rising by as much as 20% since the start of August, according to Reuters.
Over the last couple of years, oil prices have fallen dramatically due to a worldwide oversupply, reaching a low of just £30 per barrel this February. Since then, there has been a steady upswing in oil prices, which have been hovering close to the $50 mark in recent months. Although this is an improvement, it is still much less than the $114 per barrel oil was commanding back in the summer of 2014.
The fall in prices experienced on the first day of September can be attributed significantly to the US dollar, which is currently in a strong position. Since oil is bought and sold in dollars, it is presently a lot more tempting for investors to spend their money on non-US oil. Although this is bad news for US oil, it may well benefit companies who operate outside of the US, including Royal Dutch Shell, known for its Shell Gadus S2 V100 3 grease.
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