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Oil Prices to Stay Weak as Supply Overwhelms Demand

Increasing output and slower consumption are helping to keep prices low.
October 2, 2014

​NEW YORK – A global glut of oil sent prices skidding this summer, and demand is expected to remain soft in the coming months, according to various news sources.

Brent — the global benchmark — and U.S. benchmark crude have fallen about 15% from their mid-June highs, closing the quarter at more-than-one-year lows. Brent prices are now down 20% from their peak in February 2013. Anticipated supply disruptions in Iraq, Russia and elsewhere earlier this year failed to materialize, and tepid demand has forced oil producers to cut prices to attract buyers, according to a report from the Wall Street Journal.

Adding to the supply glut, the world's oil output hasn't been seriously dented by violence in the Middle East, Europe and Africa. Falling prices have prompted speculation that OPEC will reduce production to keep oil above $100 a barrel.

Analysts say that, although demand could pick up as the winter heating season approaches, it won't be enough to boost prices much above current levels, especially as U.S. refiners shut down units for seasonal maintenance, reducing crude-processing capacity.

For more on how market conditions affect gas prices check out the NACS Retail Fuels Report.