http://www.theweek.co.uk/business/oil-price/60838/oil-price-brent-crude-rebounds-from-five-year-low
Oil price: Opec is dead
and oil could hit $50,
says Bank of America
Opec's inaction as the oil price continues to
tumble shows that the cartel is 'effectively
dissolved'
LAST UPDATED AT 20:54 ON WED 10 DEC 2014
Oil prices could hit $50 per barrel in
2015 and Opec is effectively irrelevant,
the Bank of America has suggested.
Francisco Blanch, the bank's commodity
chief, warned that the consequences of
Opec's decision not to stabilise prices at its
last meeting will be "profound and long-
lasting," and said that oil cartel is now
"effectively dissolved".
Oil will now enter a period of wild price
swings and "disorderly trading" that will
benefit cash-rich Middle East petro-states
such as Saudi Arabia, but will damage some
of Opec's less wealthy members such as
Nigeria and Venezuela, the Daily Telegraph
reports.
The Bank of America said in its end of year
report that as a consequence of falling
prices, 15 per cent of US shale gas producers
are already losing money and up to half of
all shale operations will face financial
difficulties if oil prices slip below $55 a
barrel.
Years of oversupply in conjunction with
developments in liquefied natural gas (LNG)
have brought prices to their lowest point in
five years. If the global oil glut is not
brought under control, prices will slide
towards $50, the bank said.
Citigroup disagreed with the Bank of
America's assessment, suggesting that shale
gas is more robust than their rival suggests,
and will be able to weather prices nearer to
$40 per barrel.
According to the end-of-year report,
declining oil prices may lead to large-scale
shale projects in Argentina and Mexico
being scrapped, and could force some
exploration in the remote areas of Russia
and Canadian oil sands to be scaled back.
Several major oil companies are also
expected to cancel projects if the price of
Brent crude price remains below $80.
In spite of the continuing freefall of oil
prices in the months ahead, prices are
expected to rebound in the middle of the
year, said Sabine Schels, an energy expert
for the Bank of America. "We expect a
pretty sharp rebound to the high $80s or
even $90 in the second half of next year."
Oil price: Brent crude rebounds
from five-year low
9 December
The price of Brent crude rebounded on
Tuesday afternoon after hitting a new five-
year low of $66 per barrel, as some traders
gambled that the prices had reached a floor.
After oil prices continued yesterday's
downward trajectory in early trading, some
buyers eventually emerged, apparently
anticipating that prices are now bottoming
in the wake of a 40 per cent slide since
June.
The sharp drop in oil prices has been caused
by rapid growth of US shale output and
concerns that the global oil glut will
continue well into 2015 following the
decision of Opec not to cut production when
the organisation met in Vienna last month.
Prices tumbled by almost $3 a barrel on
Monday following a forecast from Kuwait
that the cost per barrel would hover around
the $65 mark until at least next summer.
Kuwait is a key ally of Saudi Arabia and
"follows the strategy set by the world's
largest crude producer, which has triggered
a price war with American shale oil
companies", The Times says.
In spite of today's slight rally, many traders
believe it is too soon to call a floor, Reuters
reports.
"Although talks of oil reaching its bottom
are more rampant, we fail to see a reversal
coming without stronger fundamentals,"
said Daniel Ang of Phillip Futures.
Brent crude for January deliveries fell as
low as $65.29, its weakest since September
2009, but was up 46 cents at $66.65 a
barrel by 1.30pm GMT. US crude was up 64
cents at $63.69 a barrel, having plummeted
to $62.25, its lowest since July 2009.
Oil price slips towards five-year low
of $68 a barrel
8 December
The oil price has fallen by more than a
dollar as it sinks towards its weakest point
since October 2009 after Morgan Stanley
forecast that oversupply would peak in
2015.
The investment bank cut its forecasts
following Opec's decision not to reduce
production to address the growing oil glut.
"Without Opec intervention, markets risk
becoming unbalanced, with peak oversupply
likely in the second quarter of 2015,"
Morgan Stanley said in a report dated 5
December.
In its report, the bank slashed its average
2015 Brent base-case forecast by $28 to $70
per barrel and for 2016, by $14 to $88 from
$122 a barrel.
In its worst-case scenario, the report
suggested that oil could fall to $43 in the
second quarter of next year.
Today, Brent crude for January was down
90 cents at $68.17 a barrel, Reuters reports,
having gone as low as $67.73 in intra-day
trading, just slightly above last week's
bottom of $67.53 – the lowest oil has fallen
since October 2009.
Oil prices also dropped slightly following
the publication of China's monthly trade
data, which came in well below
expectations. In November, Chinese imports
fell by 6.7 per cent and exports grew just
4.7 per cent.
"We expect China's trade data to cause
falling oil prices to fall further, as exports
were lower than expected," Daniel Ang of
Phillip Futures told CNBC. "Although lower
imports would imply less crude imports, we
attribute falling crude oil prices to be the
primary reason for a reduced value of
China's imports."
As a consequence of falling prices, British
oil company BP announced that it would
cut hundreds of back-office jobs around the
world in downsizing measures.
BP said that tumbling prices underlined the
importance of "making the organisation
more efficient".
The company has 84,000 employees
worldwide, including 15,000 in the UK,
the BBC reports, but has been downsizing
since the catastrophic Deepwater Horizon
oil spill in the Gulf of Mexico in 2010.
http://www.theweek.co.uk/business/oil-price/60838/oil-price-brent-crude-rebounds-from-five-year-low
currently on http://www.bloomberg.com/energy/
Commodity Units Price Change % Change
Crude Oil (WTI) USD/bbl. 59.29 -0.66 -1.10%
Crude Oil (Brent) USD/bbl. 63.20 -0.48 -0.75%
My perception on the downward plunge of oil price: 1. Nigeria will have excess crude oil but she doesnt have the capacity to meet the demand by the populace.. 2. Since we depend more on importation of refined oil, there will be a lot of pressure on the Naira, which will lead to further devaluations.. 3. With further devaluation, the people become poorer, and everything goes sky high. What is the way forward for Nigeria? |
Oil prices sink below $58 a barrel[font=Lucida Sans Unicode][/font] Oil prices are weighing on global markets as crude prices continue sliding. A barrel of the benchmark U.S. crude, West Texas Intermediate, sold for January delivery on the New York Mercantile Exchange is down to $57.99 in afternoon trading. The Dow Jones industrial average fell 195.48 points, or 1.11%, to 17,400.86. Uncertainty over oil prices is weighing on markets, especially after the International Energy Agency said global oil demand in 2015 will grow by 900,000 barrels a day, 230,000 less than previously forecast, to 93.3 million. http://www.usatoday.com/story/money/markets/2014/12/12/oil-prices/20294645/ |
