Houston – 13 Jan 2015 – Oil prices took another sharp turn downward on Monday to levels not seen since the depths of the 2009 recession. Several international banks predicted even lower prices later this year because of an oversupplied global crude market.
The latest daily downward spiral of more than 5 percent has brought several crude oil benchmarks down by more than 55 percent since June in one of the fastest drops ever for the volatile commodity.
The drop came even as Venezuela and Iran coordinated their efforts to persuade OPEC to cut production; Canadian Natural Resources a major global producer announced deep investment cuts; and American companies dropped their rig drilling count at quickening speed.
The day’s plunge began after Goldman Sachs released a bearish oil report Sunday night predicting that the American price benchmark which dropped to about $46 a barrel on Monday would fall to $41 in three months and $39 in six months – before recovering to $65 by the end of the year.
Drivers continue to enjoy the benefits of the oil price drop. The average price for a gallon of regular gasoline on Monday was $2.13 according to the AAA auto club 7 cents lower than a week ago 47 cents lower than a month ago and $1.17 below a year ago. The club said that 18 states now had average gas prices that were under $2 a gallon and that “this number could rise to 25 by the end of next week given current trends.”
Oil analysts say the 93-million-barrel-a-day global oil market has a supply surplus of one million to two million barrels and that surplus is not going away soon.
Elsewhere production and exports are still growing in several countries most notably Iraq.
“The pain limit for U.S. shale drillers was reached when U.S. oil prices dropped below $50 a barrel” said Per Magnus Nysveen head of analysis for Rystad Energy a Norwegian-based global consultancy.