Crude oil prices continue to fall

Crude oil prices have continued to fall after data showed the biggest weekly US crude surplus on record.

According to Wall Street Journal, the supply data prompted investors to reduce expectations that two years of oversupply in the oil markets is coming to an end. US prices immediately shed nearly $1 a barrel and losses spread into gasoline and diesel futures.

US crude futures fell $1.33, or 2.9%, to $45.34 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell $1.28 a barrel, or 2.7%, to $46.86 a barrel on ICE Futures Europe. Both posted their seventh loss in eight sessions and lowest settlement since 27 September.

While it was the supply side of the equation hitting the oil price, Shell surprised observers by revealing that it believed demand for oil would peak between five and fifteen years from now.

In a report in The Times, Simon Henry, chief financial officer, said: “We’ve long been of the opinion that demand will peak before supply and it will be driven by efficiency and substitution, more than offsetting the new demand for transport.”

Shell was “very well placed” to supply any substitutes for oil, he said, adding: “That underpins our strategic thinking. It’s part of the switch to gas, it’s part of what we do in biofuels, both now and in the future.”

Prices have fallen from more than $110 a barrel in the summer of 2014 to less than $45 a barrel now due to oversupply and slowing demand.

The news of a further oil price drop will be unwelcomed by the biofuels industry, as it is struggling to compete with low oil prices.