Brent crude oil futures hit a fresh five-year low of $67.35 per barrel in intraday trade on Monday after China reported dismal trade data and Morgan Stanley forecast that in the worst-case scenario, the North Sea crude benchmark could drop to as low as $43 a barrel in the second quarter of next year.
The gap between crude oil prices and the dollar, too, has widened to its loftiest in five years, as brent crude oil have dropped around 40% since June, while the greenback has gained 12% against a basket of currencies on expectations of higher interest rates.
Having declined by $1.72 to $67.35 per barrel — its meanest since October 2009 — brent crude for January delivery moved to $67.62 a barrel by 1030 GMT, still down $1.45. The US benchmark crude, which had also hit a five-year low of $63.72 last week, lost $1.16 at $64.68 a barrel on Monday.
The fall was exacerbated after Morgan Stanley cut its average 2015 Brent base-case outlook by $28 to $70 per barrel, and by $14 to $88 a barrel for 2016. Its warning that oil prices could nosedive to just $43 a barrel next year in the worst possible scenario troubled the investors, who are already worried about growth concerns in China and Europe and reduced appetite for key raw materials. Latest data showed China’s overall imports unexpectedly dipped 6.7% in November and export growth slowed, stoking concerns of a sharp slowdown.
“Without Opec intervention, markets risk becoming unbalanced, with peak oversupply likely in the second quarter of 2015,” Morgan Stanley analyst Adam Longson said.
However, leading oil exporter Saudi Arabia was unnerved by calls from poorer OPEC members late last month to cut production, causing prices to fall futher. Reports that the US shale industry added three new oil-drilling rigs last week despite low oil prices further depressed sentiments in a market already awash with supplies.
Even a 9% rise in China’s crude oil imports in November from the previous month to 6.18 million barrels per day failed to improve sentiments, as many believed it could be a temporary reserves-boosting measure and not a strong sign of a pick-up in actual demand in the world’s second-largest economy.
Fall continues
* Brent crude for January delivery moved to $67.62 a barrel by 1030 GMT. The US benchmark crude, which had also hit a five-year low of $63.72 last week, lost $1.16 at $64.68 a barrel on Monday
* The fall was exacerbated after Morgan Stanley cut its average 2015 Brent base-case outlook by $28 to $70 per barrel
* Its warning that oil prices could nosedive to just $43 a barrel next year in the worst case troubled the investors
