Brent Makes Modest Gains In A Turbulent Market

The oil market continued to respond to the growing supply glut with volatility on Wednesday as Brent crude oil made its way above $71. The commodity traded at $71.09 at 9:10 GMT as investors wondered where its floor would be after weeks of decline.

On Monday, the commodity fell to a five year low of $68 as markets tried to cope with OPEC’s decision not to cut output last week. On Thursday, the cartel effectively pitted its members against each other by making no changes to the group’s production. With US shale oil helping fuel a growing supply glut, investors have been wary as demand looks unlikely to catch up to the growing supply.

Saudi Arabia was one of the OPEC countries that was pushing for the group to accept the current low prices, something that some of the group’s other nations said they couldn’t afford. Officials from the kingdom said Tuesday they would not participate in a cut that was agreed to only by OPEC. Instead, Saudi Arabian officials said all oil producing countries, including nations outside the cartel like Russia, would have to agree to cut production in order for the kingdom to cut back.

However, crude found some support from a Reuters report which showed that the cartel’s supply fell by 340,000 barrels per day in November. Though the cutback did not come from a production cut within the cartel, Libya continued to struggle with the closures of some of its major oilfields which contributed to the group’s declining supply.