Baku, Azerbaijan, Dec. 14
By Aygun Badalova - Trend:
Brent crude's renewed slide below $40 per barrel was the damning verdict on OPEC's failure to agree on a number even for what is largely a notional output target, analysts of the British economic research and consulting company Capital Economics said in a report obtained by Trend.
"Oil prices fell to a seven year low this week as OPEC's failure to agree on a target continues to reverberate through the markets," analysts said.
They believe that in principle, prices could keep falling, but it is unlikely that oil prices will drop much further, or at least not for very long.
"We think the outlook for 2016 is brighter. Indeed, stronger economic growth should support demand for oil," analysts said.
In addition, falls in non-OPEC supply should help to reduce the amount of excess supply in the market. Financial headwinds, such as the stronger dollar and negative sentiment towards commodities in general should also ease next year, supporting prices, they believe.
While analysts have cut their end-2016 forecast for Brent from $60 to $55, they continue to expect oil prices to stage a partial recovery next year.
Crude oil futures fell for a seventh straight session on Monday, their longest losing streak since mid-2014, as a forecast from the International Energy Agency (IEA) that the global supply glut was likely to deepen next year dragged on prices.
Brent crude futures fell below $38 a barrel for the first time since December 2008 on Friday. WTI settled in the $35 territory for the first time since February 2009.
Both benchmarks have fallen every day since OPEC on Dec. 4 abandoned its output ceiling.
OPEC's crude oil production increased to 31.5 mb/d during last two years, 1.5 mb/d more than the determined 30 mb/d.