NPR logo
Global Oil Prices Fall To 11-Year Low
  • Download
  • <iframe src="https://www.npr.org/player/embed/462176213/462176214" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript
Global Oil Prices Fall To 11-Year Low

Business

Global Oil Prices Fall To 11-Year Low

Global Oil Prices Fall To 11-Year Low
  • Download
  • <iframe src="https://www.npr.org/player/embed/462176213/462176214" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

Global oil prices dropped again, falling to an 11-year low on Wednesday as investors worried about weak demand for refined petroleum products. New government data show U.S. stockpiles of gasoline and distillates, including diesel fuel and heating oil, soared in recent days, offsetting a decline in crude supplies. Taken together, crude and refined products are now at a record high, and that glut is driving retail prices lower.

AUDIE CORNISH, HOST:

Prices for U.S. crude fell more than 5 percent today, to less than $34 a barrel. And if that sounds really low to you, you're right. Oil prices haven't been that low in years. NPR's John Ydstie has more.

JOHN YDSTIE, BYLINE: There were lots of reasons that oil prices fell sharply today. Fadel Gheit, an oil expert at Oppenheimer & Co. says, one factor was more evidence of a slowdown in China.

FADEL GHEIT: The economy is growing at a slower pace, and energy efficiency continue to pick up.

YDSTIE: And slower growth and greater efficiency means less demand for oil from a big consumer. And while global demand is weak, there's a glut of oil worldwide. A report today showed a big jump in U.S. stocks of distilled oil products like gasoline and diesel fuel. That surprised oil traders and sent crude prices sliding. Fadel Gheit says the broader context for the drop in oil - from more than a $100 a barrel a year and a half ago to just under $34 today is the U.S. shale oil boom.

GHEIT: Our shale production is 4.5 million barrel. For people to understand what that means, it is double the production of Kuwait.

YDSTIE: Gheit says that huge addition to global production has disrupted the OPEC cartel forever. Instead of cutting production to support prices, OPEC's leader, Saudi Arabia, is pumping freely to try to drive U.S. shale producers out of business.

GHEIT: There will be an industry shakeout.

YDSTIE: But the U.S. industry has proved more resilient than expected. Gheit says oil could go lower before it ultimately returns to sustainable levels of between $60 and $75 a barrel.

John Ydstie, NPR News, Washington.

Copyright © 2016 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.