For the first time since early 2009, United States crude fell below $37 (34 euros) on Tuesday, dropping more than $1 from its last settlement on Monday. We are already touching Dollars 40 per barrel in Brent, does 2015 end with Brent below USD 40 per barrel?
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The consultancy Capital Economics said: “Brent’s [short-lived] dip today below $40 per barrel is a further damning verdict on Opec’s bungled communications after its meeting last Friday”.
China’s crude oil imports for the first 11 months of the year rose 8,7% to 6,61 million barrels per day while its November crude imports grew 7,6% from the same month a year ago.
“The impact of the price falls from mid-2014 and changes to our oil price assumptions have been a key driver of sovereign rating actions”, Fitch said, adding that it had downgraded several oil producing countries and also put the world’s biggest oil exporter, Saudi Arabia, on negative outlook.
This latter group includes Venezuela, Iraq and Libya.
Oil’s slump has deepened as OPEC extended a fight against USA shale producers amid a surplus estimated by the International Energy Agency at almost 3 billion barrels. While on the flip side, “Venezuela’s energy minister… warned that the price situation was extremely critical and that prices would drop to $20/bbl without OPEC action”.
But the effects on energy and commodities firms have been devastating – hitting investment and jobs – with Anglo American the latest to announce a dramatic scaling-back in its future plans to help it account for the collapse in prices. Markets are still finding it hard to digest the Organization of Petroleum Exporting Countries’ (OPEC) decision to not support the prices.
Goldman Sachs said after the OPEC-meeting that it expected oil prices to remain “lower for longer”, with a risk that oil prices could fall as low as $20 per barrel.
Others disagreed. Patrick Pouyanne, CEO of French oil company Total, said at the same event that he did not expect prices to recover next year as production growth was set to outstrip a rise in demand.
Oil futures ended lower with Brent down over 1 percent on Tuesday after plumbing near seven-year lows seen on fears that global oil producers will pump even more crude in battle for share in a saturated market.
From a technical perspective, analyst Nigel Foo said that WTI crude oil should find a major bottom in the next one to two months.
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“But weighing that possibility against the virtual inevitability of higher prices down the road leads to a simple conclusion: now is not the time to exit the market”, he added in the letter. China is the world’s second-largest economy. The Nasdaq composite dropped 40.46 points, or 0.8 percent, to 5,101.81.
