Date
22 September 2017
Shale oil from Texas is contributing to global oversupply of crude. Photo: Bloomberg
Shale oil from Texas is contributing to global oversupply of crude. Photo: Bloomberg

Oil prices fall to 2009 recession lows

Oil prices fell sharply Monday to their lowest since the 2009 recession.

Several international banks predicted even lower prices later this year because of oversupply, the Wall Street Journal reported.

The latest drop of more than 5 percent has brought crude oil benchmark prices down by more than 55 percent since June.

The day’s slump began after Goldman Sachs released a bearish oil report Sunday night predicting the US price benchmark, which dropped to about US$46 a barrel Monday, would fall to US$41 in three months and US$39 in six months, before recovering to US$65 by the end of the year.

“We believe this bear market will likely be characterized by more of a U-shaped recovery in which markets take longer to recover,” the Goldman report said, “and will likely rebound to far lower prices from where they sold off from.”

Oil analysts say the 93-million-barrel-a-day global oil market has a supply surplus of between one million barrels and two million barrels, and that surplus is not going away soon, the WSJ said.

US production, which has grown by more than a million barrels a day in each of the last three years because of a frenzy of shale drilling in North Dakota and Texas, is still growing, though at a slower rate.

Elsewhere, production and exports are still growing in several countries, most notably Iraq.

Meanwhile, slowing economic growth in Europe and parts of the developing world is curbing demand.

– Contact us at [email protected]

FL/

EJI Weekly Newsletter

Please click here to unsubscribe