The past trading week was a nightmare for the global market of crude oil, with a major price crash. In particular, Brent oil dropped in value all the way down to the lowest price since July 2017. This was a dive below 53 dollars per barrel. Since then, international experts have been trying to figure out the reason for that.
All in all, the price dropped 11% down over the course of the past trading week. Experts say, this has been one of the biggest crashes seen over the last 3 years. On Friday alone, Brent oil lost more than 1% of its value, NordFX reports. At the same time, it's also interesting to note that Brent already lost some 12% of tis value 4 weeks before the latest price drop seen last week. The price traded below 53 dollars per barrel, but then managed to recover most of the lost ground. This time, as of Friday, it lost almost the same share of its value.
The OPEC+ agreement resulted in a temporary rally.
For those of you who don't know, in early December, the participants of the so-called OPEc+ agreement signed an agreement to cap their oil production once again. Apparently, this agreement sent oil prices higher. However, as we can see now, this was a temporary rally. Back then, the prices managed to exceed 60 dollars per barrel, only to plunge again. It seems that this rally was a recovery inside a bigger-scale downtrend going on over the last few months. It's interesting to note that crude oil has been in the red zone for 9 out of 11 trading week. Since than, the energy carrier has already lost more than 30% of its value seen around the local highs.
It's also important to keep in mind that the bearish factors are getting stronger in the global market of crude oil. the list of the reasons triggering the downtrend includes the excessive supply in the global market initiated by more intensive oil exports coming from the United States coupled with a global economic slowdown, which is usually coupled with a decline in the global consumption of crude oil. By the way, American shale oil producers has taken the lead in global oil production this year.
