The Sunday Mail
THE US benchmark crude price, down more than $60 since June to below $45 Wednesday, is on the way to this next threshold, said Societe Generale SA and Bank of America Corp.
And Goldman Sachs Group Inc. says that West Texas Intermediate needs to remain near $40 during the first half to deter investment in new supplies that would add to the glut.
Oil is seeking a “new equilibrium” as the Organization of Petroleum Exporting Countries abandons its role of keeping supply and demand aligned, according to Goldman.
Prices are poised to drop further, testing the ability of US shale drillers to keep pumping. WTI fell as low as $44,20 a barrel on the New York Mercantile Exchange Wednesday and closed Thursday at $48,48. The US benchmark has dropped 10 percent this month, extending a 46 percent plunge last year that was the worst since the 2008 financial crisis.
OPEC is trying to maintain its share of the global oil market against the rise of US output. United Arab Emirates Energy Minister Suhail Al Mazrouei reiterated Wednesday that shale producers will capitulate before OPEC to lower prices, the latest in more than a dozen comments from Gulf members aimed at hastening oil’s slide and lowering non-OPEC supply. The group upheld its target of 30 million barrels a day at a meeting in Vienna on November 27. – Bloomberg
