The News Agency United Press International (UPI) has reported from New York crude oil prices suffered major losses on Thursday, April 2, 2015 after U.S. federal data showed commercial crude oil inventories surged to their highest level in 80 years.
The price for West Texas Intermediate crude oil, the U.S. benchmark, dropped 2.25 percent in early Thursday trading to sell for $48.96 per barrel.
Brent crude oil for May delivery was down about 2.7 percent from the previous close to sell for $55.51 in early Thursday trading. Brent is down about 1.5 percent for the week.
BofA Merrill Lynch says combination of stronger USD, a slowing China, and falling commodity prices will not go away soon;Brent will average $52 in 2015, $58 in 2016.
In its latest report on crude Oil, BofA Merrill Lynch has predicted that Brent will continue to average $52 in 2015, $58 in 2016. The report added that a V-shaped recovery in oil prices is unlikely.
The report says in the past 15 years, the global economy was defined by rising commodity prices, zero interest rate policy, and a weak USD. This cycle has now gone into reverse with a decelerating industrial economy in China and the rise of US shale. As US employment picks up, Europe and Japan fight secular stagnation.
The observable outcome is monetary policy divergence and a strong USD. Meanwhile commodity markets face surpluses after years of excess investment as EMs face a higher Fed funds rate cycle. This combination of a stronger USD, a slowing China, and falling commodity prices is not going away anytime soon.
As the money runs dry and governance issues across EMs spring up, expect global oil demand to stay soft. “We reiterate our view that Brent will average $52/bbl in 2015 and $58/bbl in 2016,” the report said.
Meanwhile. the News Agency United Press International (UPI) has reported from New York crude oil prices suffered major losses on Thursday, April 2, 2015 after U.S. federal data showed commercial crude oil inventories surged to their highest level in 80 years.
The price for West Texas Intermediate crude oil, the U.S. benchmark, dropped 2.25 percent in early Thursday trading to sell for $48.96 per barrel. With oil markets favoring the supply side for close to a year, WTI has been unable to hold above the $50 mark for very long.
Data from the U.S. Energy Information Administration show total commercial crude oil inventories increased by 4.8 million barrels from last year to 471.4 million barrels, the highest level for this time of year in the last 80 years.
Total U.S. crude oil production for the week ending March 28 was nearly 9.4 million barrels per day, a 14.6 percent increase from the same week in 2014.
Despite early gains, the price for WTI is relatively unchanged for the week.
Crude oil prices were again pressured by ongoing nuclear negotiations with Iran and world powers in Switzerland. Talks have gone two days beyond a self-imposed Tuesday deadline.
Iranian Foreign Minister Mohammad Javad Zarif said there were still details to be discussed, but progress has been made at the negotiating table.
“We have made significant progress [but] we don’t have any final result yet,” he said Thursday.
Sanctions relief for Iran could mean the Islamic republic puts more of its crude oil into the international market. Iran in 2011 exported around 2.5 million bpd. Last year, exports under sanctions averaged 1.4 million bpd.
Brent crude oil for May delivery was down about 2.7 percent from the previous close to sell for $55.51 in early Thursday trading. Brent is down about 1.5 percent for the week.
