Fundamental Comment

Crude oil near two-month low on oversupply concerns

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Crude oil prices continued to fall for a third consecutive session on Monday to hit a two-month low, amid concerns about oversupply and on excitations OPEC would raise production to offset the shrinking oil supplies from Iran and Venezuela.

US crude futures slipped to a two-month low of $65.27 a barrel, after opening at $65.64 a barrel, while currently trading at $65.37 a barrel.

Brent crude hit a three-session low of $75.51 a barrel, while menwhile trading at $75.79 a barrel.

During the weekend, oil ministers of the Arab countries in OPEC, led by Saudi Arabia, agreed to continue cooperation with the non-OPEC producing countries such as Russia in order to balance the world oil markets.

OPEC's next meeting on June 22 may see countries agree to increase supply by the Organization to counter production failures in Venezuela due to its current economic crisis, as well as offset the reduction in production expected by Iran due to US sanctions.

In the United States, demand is expected to increase during the summer, which will cause a decline in US crude stockpiles, but the continued production of shale oil would compensate for this high demand during the summer time.  

U.S. production rose to a new record monthly level in March to reach 10.47 million barrels per day, according to data from the US Energy Agency.

The number of oil drilling rigs operating in the United States over the past week has risen again by two diggers, bringing the total to 861 diggers, the highest level since March of 2015.

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