Crude oil futures are trading dramatically lower today. Currently (11amCT) Brent crude futures are at $98.27 after opening at an even $100.00/barrel, while the WTI crude price sports an $80 handle, opening today at $88.80 and trailing.
The fall in Brent crude below $100.00/barrel comes as no surprise to industry experts who point out this is a sign the market is adequately supplied. Sluggish fuel demand and declining fuel prices in the U.S. amid robust national crude and gasoline supplies have limited upside action for Brent, and driven WTI crude below $90.00/barrel.
These low prices are not expected to last through the second quarter, and as the current sticker price falls, hedgers eye an opportunity to enter the market. An injection of fresh investment capital could help excite upside action, but the market really needs some fresh demand news to improve Brent's prospects.
We may also see OPEC curtail production in response to lower the global supply, raising margins. But North American import demand is insulated by robust production of its own and as long as WTI stays above $75/barrel, U.S. production is expected to maintain its current clip.
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