Crude oil tumbled in the morning session to trade at 41.09 giving up 81 cents while Brent oil gave up 26 cents to 44.17. The US dollar soared to 99.94
This past week, Saudi Arabian oil minister Ali al-Naomi said something quite starling about what the lack of investment in the industry could do to future supplies:
“There is a big drop in the production capacity of oil wells across the world, estimated around 4 million barrels a day, which means the petroleum industry needs new additional production capacity of around 5 million barrels a day every year … to meet the global demand.”
Oil extended its decline on Monday as Venezuela predicted prices may drop as low as the mid-$20s a barrel unless the Organisation of Petroleum Exporting Countries takes action to stabilize the market. January futures fell as much as 1.1 per cent in New York after front-month prices slid 0.9 per cent last week.
Saudi Arabia and Qatar are considering Venezuela’s proposal for an equilibrium price of $88 a barrel, Venezuelan Oil Minister Eulogio Del Pino told reporters on Sunday in Tehran. OPEC should make room for increased Iranian crude production within its ceiling of 30 million barrels a day, the nation’s Oil Minister Bijan Namdar Zanganeh said.
The Saudis have the highest production of oil in the world investing a considerable portion of these resources in the United States. They participate in the USA, inclusively, through the control of the Motiva Enterprises refinery, the largest in the US, whose main function is to refine shale oil. Despite the drop in oil value, largely due to increased production of shale oil in Canada and the United States, oil production in June 2015 in Saudi Arabia has exceeded 10 million barrels a day. This production was exported largely to Asia and India. Watch this point favoring the princes’ friends arising from the sanctions imposed on Iran and Russia, both major suppliers in the region.
The average price of gasoline in the United States resumed its slide over the past two weeks, dropping 11 cents to $2.14 a gallon, the lowest since late January, according to a Lundberg survey released on Sunday.
The 5 percent decline in gasoline prices came as oil refiners and gasoline wholesalers and retailers passed along lower oil-buying prices to consumers, said survey publisher Trilby Lundberg in emailed comments. Current retail gas prices were 70 cents below the year-ago period and at the lowest level since Jan. 23, when the average price was $2.07 per gallon.