Oil futures of the International Brent Crude Oil decreased by 1.1% and ended at $61.39 for a barrel which is a decrease of about 71 cents due to a fire in Illinois refinery. The distillation unit is a large one and due to the fire the operations had to be stopped, and it had to be closed down.
Fall in oil prices:
There is a fall in the crude oil prices in the United States, and there are many reasons for it. Of them, the increase in the number of oil rig operations by energy firms is also one of them. Baker Hughes reported on Friday, that the energy companies have in the last three weeks increased the number of rigs for operation twice, and as many as 7 rigs for crude oil was added up till Feb 8. Till date, the number of rigs in operation is 854 which is going to result in an increase in crude oil production in the United States and may surpass the already recorded high of 11.9 million barrels per day.
The crude futures at the West Texas Intermediate WTI ended at the price of $51.92 for a barrel and was compared to the last settlement by 80 cents or 1.5%. Moreover, another detrimental factor is the closing down of the Wood River, Illinois refinery crude oil distribution unit which produces 120,000 bad. The refinery unit caught fire on Sunday following which it had to be closed down. Even the International Brent Crude Oil futures closed at $61.39 per barrel down by 1.1%.
The prices of oil could have reduced much further, but the sanctions by the US on the state-owned oil company PDVSA in Venezuela has prevented further fall. ANZ Bank released a statement on Monday saying ‘the issues in Venezuela continue to support prices. Reports are emerging that PDVSA is scrambling to secure new markets for its crude oil after the US placed additional sanctions on the country’.
Outside of the US, Igor Sechin who is the head of a big Russian Oil company has addressed a letter to Vladamir Putin, the Russian President that the deal by Moscow to curb output with the OPEC can backfire and can become beneficial to the United States. The deal which was done in 2017 so that the demand for crude oil rises has been extended multiple times. The current deal is to reduce output by 1.2 million barrels per day till June end. The Organization of the Petroleum Exporting Countries and the allies will review the deal again in April.