Oil falls following U.S’s withdrawal from Paris Agreement

By Azernews

By Sara Israfilbayova

Oil prices dropped on June 2 amid worries that U.S. President Donald Trump's decision to withdraw from a global climate pact could spark more crude drilling in the U.S., stoking a persistent glut in global supply.

Global benchmark Brent crude futures were down by 0.55 percent, at $50.35 per barrel, U.S. West Texas Intermediate crude (WTI) futures dropped by 0.66 percent, to $48.04 per barrel.

Trump framed his decision to pull the U.S.  [which is the world’s second-largest emitter of carbon, behind only China ]from the landmark Paris Agreement as “a reassertion of America’s sovereignty”.

He said the U.S. would cease all implementation of non-binding elements of the agreement "as of today" and it would begin negotiations either to re-enter the Paris accord or to have a new agreement "on terms that are fair to the United States, its businesses, its workers, its people, its taxpayers".

He also added that the country's participation in the treaty threatened to lose 2.7 million workplaces by 2025.

Jeffrey Halley, a senior market analyst at OANDA [Foreign exchange company] says that this could lead to a drilling free for all in the U.S.

The Paris Agreement is a deal reached between 195 countries to gradually reduce emissions that cause climate change in order to prevent a major increase in the global temperatures that could raise sea levels, spark major droughts, and lead to more dangerous storms, which was negotiated in 2015.

The agreement aims to limit the increase in global average temperatures to “well below 2°C above pre-industrial levels” – the level beyond which scientists say we will see the worst extremes of global warming.

A week ago, the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC members met in Vienna to roll over the output cut deal to reduce 1.8 million barrels per day until the end of next March.

Meanwhile, the U.S. Department of Energy reported that crude stockpiles were down to 6.4 million barrels in the week to May 26, beating analyst expectations for a decrease of 2.5 million barrels. Analysts believed that stocks fell less - 2.517 million barrels, or 0.48 percent - to 513.783 million barrels.