Growth in oil supply is forecast to accelerate next year in a global wave of production, keeping crude prices mired in a bear market and possibly lowering fuel prices for consumers.
The U.S. is expected to continue driving much of the surge in output, and increases by smaller producers such as Brazil and Norway will contribute to excess supply, investors said.
Citigroup and JPMorgan Chase analysts currently project supply will grow roughly one million barrels a day more than demand in 2020, resulting in a surplus each quarter of next year.
Oil fell about 6.5% to $54.80 a barrel yesterday, heading for its largest one-day drop of the year and extending losses after President Trump announced 10% tariffs on some Chinese imports starting September 1, 2019. Anxiety about trade tensions weakening demand has bolstered worries about a supply glut in recent months, investors say.
Plentiful supply has been a boon for U.S. consumers, who are on average paying less for gasoline at the pump this summer than they were a year ago and continue to drive economic growth even as business investment slows.
Companies including railroad operator Union Pacific Corp. have also cited lower fuel costs as a positive for second-quarter profits, though worries about economic uncertainty and demand continue to hurt transportation firms.
The expected oversupply is also the latest threat to the Organisation of the Petroleum Exporting Countries (OPEC) and other producers, many of which are curbing output to try to balance the market.
The post Expected Surge In Oil Supply Sustains Bear Market appeared first on Independent Newspapers Nigeria.
Source: Independent
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