Oil resumed its downward move on Thursday, falling towards $64 a barrel and within sight of a five-year low, pressured by signs that already ample supply will be even more plentiful in 2015.
Crude prices sank on Wednesday as OPEC forecast an increasing supply surplus in 2015, U.S. crude inventories unexpectedly rose and OPEC’s most influential voice, Saudi Arabia’s oil minister, shrugged off the need for an output cut.
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North Sea Brent crude LCOc1 gave up an earlier gain and was down 4 cents at $64.20 by 8:30 a.m. ET. It fell to $63.56 – the weakest since July 2009 – on Wednesday. U.S. crude CLc1, which also hit a five-year low on Wednesday, lost 37 cents to $60.57.
“We may see some technical bounces, but it is too soon to speak of a sustainable price recovery, ” said Carsten Fritsch, analyst at Commerzbank, which on Thursday cut its 2015 Brent price forecast to $73 a barrel from $82.
Brent has fallen more than 40 percent, or $50, from its 2014 high reached in June and others in the market say the losing streak could have further to run.
Christopher Bellew, a senior oil broker at Jefferies in London, said the outlook remained bearish. “It would be unwise to say the market has marked the bottom, ” he said.
OPEC said on Wednesday demand for its crude in 2015 would fall to its lowest in more than a decade, indicating a large supply surplus in 2015 without OPEC output cuts or a slowdown in the U.S. shale boom.
The prospect of any OPEC cut remained slim as Ali al-Naimi, the Saudi oil minister, on Wednesday questioned the need for one, sticking to his stance outlined at OPEC’s meeting on Nov. 27 despite a $13 drop in prices since then.
At the meeting, Saudi Arabia and its Gulf allies urged fellow OPEC members to combat the growth in U.S. shale, which needs relatively high prices to be economic and has been eroding OPEC’s market share, by resisting output curbs.