Oil prices fell again Monday on the Singapore market, as Iran and six world powers have been signaling that they will reach a deal to end Western sanctions, adding even more oil supply to a saturated market.
Reuters reported Benchmark Brent crude futures had dropped to $56.04 by 3.20 AM GMT, down 37c from Friday, which saw a 5% drop. US West Texas Intermediate (WTI) futures were down 76c to $48.11 a barrel.
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“Any relaxation of Iran oil sanctions could see increased exports adding to swelling global supply and further pressuring prices, ” an ANZ bank statement said on Monday.
“We expect Brent and WTI to bottom out at $50-$53 and $46-$48 respectively” in the second quarter starting in April, Singapore-based brokerage Phillip Futures said.
They suggested that a robust US output, Libyan production getting back on line, and weak economic data from Japan and China, could keep prices down for the foreseeable future.
The situation won’t be any better for the refinery sector.
“By summer, high [refinery] runs and seasonally weak product demand could lift product stocks and weigh on demand and prices, ” Morgan Stanley said in a statement.
Nevertheless, Goldman Sachs expects U.S. drilling to increase, despite the glut.
“U.S. producers are preparing to ramp up activity later this year by successfully raising equity and building an uncompleted well war chest. Coupled with the large availability of external capital, this leaves risk to our $65 a barrel 2016 forecast skewed to the downside as these assets will quickly be deployed in a lower cost environment, ” Goldman Sachs said.