• Friday, July 19, 2024
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BusinessDay

Oil prices continue to slide, hits 2009 low

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Global oil markets resumed their slide with Brent and US crude hitting April 2009 lows and ending down for a seventh straight week, although prices recovered from their lows after a sharp drop in the US oil rig count. Goldman Sachs slashed its short-term forecasts and Gulf producers showed no signs of cutting production.

Benchmark Brent crude broke below $49 a barrel but closed above the $50 support level it had clung to after oil services firm Baker Hughes reported the largest drop in 24 years in the number of US oil drilling rigs.

Crude prices had barely moved in the past two sessions after tumbling 10 percent.

The number of rigs drilling for oil in the United States fell by 61, Baker Hughes reported. The rig count has fallen in 10 of the last 13 weeks, from a record high of 1,609 in mid-October.

The February Brent contract was down $1.60 at $48.51 a barrel. US crude oil for February was down $1.23 at $47.13 per barrel.

Analysts at Goldman Sachs cut their three-month forecasts for Brent to $42 a barrel from $80 a barrel and for the US West Texas Intermediate contract to $41 a barrel from $70 a barrel. The bank cut its 2015 Brent forecast to $50.40 a barrel from $83.75 and US crude to $47.15 a barrel from $73.75.

Despite declining investments in US shale oil, the main driver in the current supply glut, production will take longer to come down, Goldman said in a report.

As OPEC’s November decision not to curtail production in the face of falling prices piles pressure on some group members, Venezuelan President Nicolas Maduro met Saudi Arabia’s Crown Prince Salman in Riyadh as part of a diplomatic tour in the Gulf to discuss falling oil prices.

However, Saudi Arabia, the world’s biggest oil exporter, has said it will not support prices by cutting production and ignored calls from smaller OPEC members, including Venezuela, to react to falling oil prices at the cartel’s November meeting.

Refinery disruptions in Ohio and Pennsylvania threaten to add to a growing glut of crude by reducing demand from two sizeable plants, including the largest on the US East Coast.