WTI Crude Oil Price At $30 bbl And Below Needed To Curb Output

WTI Crude Oil Price At $30 bbl And Below Needed To Curb Output

$USO, $C

After falling to 6 yr lows, US benchmark Crude Oil prices must fall further before producers begin cutting production.

WTI Crude Oil must slip below 30 bbl for output to start falling a Citibank (NYSE:C) said Thursday. And there are reasons to believe that will occur.

WTI Crude has fallen 25% this year, hitting a 6-yr low, as inventories remain about 90-M bbl above the 5 yr average. Production is more than 8% higher than a year ago.

“I wouldn’t be surprised if WTI drops below 30 later this year before rebounding,” the analyst said. Prices above 30 will not trigger output cuts, he said.

After reaching 61.43 on 10 June, the high this year, WTI has fallen 31%.

Crude Oil climbed 3.96, or 10%, to close at 42.56 bbl Thursday on the New York Merc. Crude fell to 38.24 on 24 August, the lowest since February 2009.

Even while Crude stockpiles fell by 5.45-M bbl last week to 450.8-M bbl in storage remains above the 5-yr average, the Energy Information Administration (EIA) reported Wednesday.

Stockpiles at Cushing, OK, the US’ biggest storage hub and the delivery point for WTI futures, expanded for a 2nd week to 57.7-M bbl.

Stay tuned…

HeffX-LTN

Paul Ebeling

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