Solid Production Levels In Texas Are Helping To Keep Light Crude Oil Prices Way Down

High-quality oil remains cheap, despite OPEC’s production cuts,

By Alexandra HartJune 19, 2017 10:36 am| ,

Crude oil prices are the lowest they’ve been in seven months as a global oil glut persists despite OPEC efforts to cut production.

Oil dropped below $45 a barrel on Wednesday, according to the Houston Chronicle. Matt Smith, director of commodity research at ClipperData, says that the surprisingly low cost of production may be the reason for the drop.

“It’s cheaper to produce oil than people realized, specifically here in the U.S.,” Smith says. “We’re still seeing production rising in the U.S., and leading the charge is Texas.”

Smith says because of targeted OPEC restrictions, higher quality crude is priced lower, and the market is having a hard time rebalancing.

“If you do want a silver lining,” Smith says, “gasoline prices are going to remain historically low.”

What you’ll hear in this segment:

-Why oil production is continuing despite OPEC cuts

-How different types of crude oil impact the market

-A global perspective on crude imports and exports

 

Written by Lila Weatherly.