Global benchmark Brent crude futures fell to new 11-year lows of $33.09 per barrel on Thursday, undercutting a low from a day earlier, although prices edged back to $33.52 per barrel by 0213 GMT.
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“Shale (oil) production and increasing capacity from countries like Russian Federation who need to protect revenue combined with expectations of further Iranian supply mean actual production as well as expectations of future production are rising”, Hewson said.
Right now geopolitical tensions are as high as they’ve been in a long time, and the oil markets do not like it at all.
“If they can’t agree on an output level and some way to control prices, then everybody will just keep all-out pumping and try to raise as much money as possible for their countries”, said Daniel Katzenberg, senior energy analyst at Robert W. Baird & Co.
“Oil is following equities lower because of a risk aversion”, Giovanni Staunovo, an analyst at UBS in Zurich, said by e-mail. And in the past, a simmering conflict like this would have led to a spike in oil prices.
On December 31, crude oil prices rose 1.2% to close the year at $37.04 per barrel. Total volume traded was about 34 percent above the 100-day average.
The American benchmark, West Texas Intermediate, is down by around 1.5%, at $35.45.
United States crude futures were up a notch at $36.08 per barrel after slipping 79 cents in the previous session.
DWN argued that low oil prices may put Saudi Arabia on the brink of national bankruptcy. However, U.S. crude inventories dropped by 5.1 million barrels last week.
Gasoline stockpiles jumped by 10.6 million barrels and distillates, including diesel and heating fuel, rose by 6.3 million.
The bank cut its forecast for global economic expansion in 2016 by 0.4 percentage point to 2.9 per cent, though that is still faster than 2015’s sluggish 2.4 per cent.
Using its crude in refineries instead of selling it into the market unprocessed would be similar move to other Gulf producers such as Saudi Arabia, although Iran’s challenge would be to raise financing as its existing overseas oil sale revenues are frozen as part of the sanctions.
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Moody’s Investors Service said Tuesday that metals and energy producer Freeport-McMoRan Inc’s debt is under review for possible downgrade. Oil-rich Alaska had its credit rating cut by Standard & Poor’s as low prices left the state with a growing gap in its budget.
