InvestorQ : Why did oil prices again fall on 06 May after the supply cuts agreed upon?
Khushi Patel made post

Why did oil prices again fall on 06 May after the supply cuts agreed upon?

Answer
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Anjana Aiyar answered.
4 months ago


Oil in the Brent Crude market failed to sustain higher levels and corrected on Wednesday. It may be recollected that Brent Crude had almost doubled from the lows of $16/bbl on Apr 22, on the back of growth pick-up and supply cut hopes. However, on 06 May Brent Crude again fell below $30/bbl. This fall in price was led by the oil glut in the market. The US inventories continued to pile with storage likely to run out by next month. WTI Crude was also down to $23/bbl. The total supply cut is expected to be closer to 15-20 million barrels in May with OPEC alone cutting 9.7 million bpd. However, even that may just about help balance the demand. Despite economies starting to open up, demand for fuel is expected to take quite some time to build up to normal levels. For now, oil remains weak demand driven.