Business Insider | By Lianna Brinded and Reuters
The oversupply in the oil market is killing prices, and it’s only set to get worse in 2016.
Venezuelan oil minister Eulogio del Pino said on Sunday that OPEC could not allow an oil-price war and must take action to stabilize the crude market soon. When asked how low oil prices could go in 2016 if OPEC didn’t change its policy, he said: “mid-20s.”
Meanwhile, Michele Della Vigna from Goldman Sachs told the “Today” program on BBC’s Radio 4 that oil could fall to as little as $20 a barrel. He added, however, that there was only about a “15% probability that this might happen” and that if oil were to fall to this level, it would only be temporary “shock to the system” before the market stabilized again.
Crude-oil futures lost ground on Monday in early Asian trading, as the global supply surplus pressured prices, but a cut in the number of US oil rigs for an 11th week in the past 12 limited the falls.
The benchmark front-month Brent futures for January fell 16 cents, or 0.36%, at $44.50 a barrel as of 0011 GMT after it ended up 48 cents at $44.66 a barrel on Friday.
US crude’s West Texas Intermediate January contract also shed 31 cents, or 0.74%, at $41.59 a barrel against its previous settlement at $41.90. US crude’s December futures, which expired on Friday, ended 15 cents down at $40.39 after hitting a low of $38.99, the cheapest since August 27.
Algeria’s energy earnings are forecast to fall to $26.4 billion next year, while foreign-exchange reserves will dip to $121 billion after low oil prices cut into the OPEC nation’s economy, finance minister Abderrahmane Benkhalfa said on Sunday.
US crude was briefly supported on Friday as US drillers removed 10 oil rigs in the week that ended Friday, the biggest weekly decline since late October, bringing the total rig count down to 564, the oil-services company Baker Hughes Inc. said in its closely followed report.
Markets eyed on developing geopolitical tensions in the oil-producing Middle East as Jordan’s King Abdullah, a US ally, will hold talks in Moscow on Tuesday with Russian President Vladimir Putin on how to tackle “terror groups” led by Islamic State in Syria, an official source said.
Shares in major equity markets gained on Friday and the euro weakened against the dollar as investors anticipated actions by US and European central banks next month.
A top Fed official said on Saturday that there was a “strong case” for raising interest rates when Federal Reserve policymakers meet next month, as long as US economic data does not disappoint.
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