No Sight of Relief for Sliding Oil Prices

No Sight of Relief for Sliding Oil Prices

On January 6, when the Petroleum Status Report was released by the Energy Information Administration the inventories were on the lower side. However, that did not help in stopping the oil price from going down in the week.

The indications reflect that there might be further drop in oil prices. There's no relief for the investors as oil prices are expected to remain low at least in the initial half of the year.

According to the report released by the EIA, the oil inventories dropped by 5.1 million barrels along side, the oil prices dropped 5 percent.

Even the top most energy stocks Exxon Mobil and Chevron carried on declining at the very start of the 2016. Exxon dipped 4.21percent and Chevron dropped 8.74 percent. Low price of oil and the volatility, both indicate a weaker energy outlook for a long term. The oil industry also faces noteworthy pressure from the Middle East oil producing nations.

The 2016 oil outlook is being impacted by some major developments in the Middle East. Among them the major one is the ongoing political tensions between Saudi Arabia and Iran. This has increased the risk of pricing competitiveness.

In another instance, Saudi Arabia signalled that it might auction Aramco shares in an initial public offering. Is the biggest oil producing company n the country and more capital in hand will allow sustaining the low oil prices for a longer while without lowering its productions.


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