Oil Price News: Crude Oil Trading Below $50 A Barrel
US crude had snapped a seven-week last week after bullish comments from the International Energy Agency. Oil prices fell at the beginning of the week, dipping back below $50, as analysts see little evidence of the combination of oversupply and sluggish demand that has pummeled oil prices subsiding.
US output of oil rose to 9.19 million barrels a day through January 9th, the fastest pace in weekly records since 1983. The US oil boom has been driven by a combination of horizontal drilling and hydraulic fracturing. The IEA lowered its non-OPEC supply growth estimate by 350,000 barrels a day, the first reduction since the 2015 forecast was made in July.
This reduced projection, along with bullish comments that the tide on oil prices will turn soon, caused oil prices to rise slightly last week. However, analysts still believe that oil market balances remain weak, with prospects of a recovery looking dim until the latter months of 2015. The comments from the IEA were enough to stop oil price’s decline, but were not able to turn prices bullish.
Investors this week will closely watch the European Central Bank’s meeting on Thursday, where there will likely be a launch of a government bond-buying program. This will cause the euro to fall further against the dollar, adding further downward pressure on oil prices. China is also expected to announce their weakest economic growth data in 24 years on Tuesday.
JP Morgan was the latest bank to cut its forecast for oil prices, cutting its 2015 average Brent crude price forecast to $49 a barrel from $82 a barrel. The financial services firm sees significant oversupply in the short term, with risk that oil falls below $40 a barrel if the oil market is not able to accommodate a 1.6 million-barrel-a-day surplus, potentially reaching a low of $38 in March.
