Brent and US crude oil prices both hit five year lows yesterday, before rebounding slightly, and experts expect them to go lower still.
Benchmark Brent was down by 36 cents a barrel to $57.52, putting it on track for its second weakest month since the global financial crisis of 2008, while US crude was off 3 cents at $53.57 by late afternoon UK-time.
Richard Hastings, a macro strategist at American investment bank Global Hunter Securities said US crude would likely break below $50 in the next few trading days.
He added: “It’s an unstable situation once again. We’ve broken through some of the levels that we saw that started to firm up over the last week or so.”
Brian LaRose, a technical analyst with United-ICAP, a US service focused on identifying the likely direction, extent and duration of price trends in crude oil, petroleum products and natural gas, said a “significant catalyst” was needed to prompt buying, adding: “Until we see some sort of technical evidence developing, then one has to be sceptical of picking a (price) bottom.”
Oil markets have been heavily oversupplied this year due to increasing output of high quality, light oil from US shale and lower-than-expected consumption as a result of faltering global economic growth.
There were expectations on Monday that the destruction of more than 1million barrels of oil by a fire at Libya’s main oil port could push Brent over $60, but by the end of the day prices had fallen past previous lows.