Oil prices hit its lowest point since December 2017 on Tuesday, with the United States West Texas Intermediate (WTI) losing $2 in less than 30 minutes to sell at $55.12.
The development which also saw Brent crude futures, the global benchmark fall by 7.34 percent to $64.97, came following anticipated oversupply in the global crude oil market.
Concise News recalls that the Organisation of Petroleum Exporting Countries (OPEC) and its allies led by Russia had acknowledged during its last meeting that an oversupply of oil in the market is imminent in 2019.
On the other hand, Saudi Arabia, a prominent member of the oil cartel, said it would cut exports by as much as 500,000 barrels per day (bpd) in November and December to curb oversupply. This took prices up on Monday but not significantly so.
The sharp drop in prices was seen after Donald Trump, the President of the United States tweeted same Monday that Saudi Arabia and OPEC should not cut production to reduce supply.
“Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply,” Trump tweeted.
Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!
— Donald J. Trump (@realDonaldTrump) November 12, 2018
Meanwhile, there are indications that traders will keep selling crude at lower prices as a result of oversupply after the United States the world’s top oil producer ahead of Saudi Arabia and Russia.
A lift in US sanctions on Iran increased shale oil production coupled with predictions of reduced world demand for oil has kept prices in trenches.
However, a fall in oil prices is expected to negatively impact the Nigerian economy, which is largely dependent on oil for foreign exchange earnings.