Analyst talks of US$40-a-barrel as crude prices fall again
NEW YORK, USA (AFP) — Talk of US$40-a-barrel oil picked up pace Friday as crude prices fell again, to their lowest point since April 2009.
The US benchmark, WTI crude for February delivery, lost 43 cents to end at US$48.36 a barrel on the New York Mercantile Exchange.
In London, the Brent benchmark for February finished off 85 cents at US$50.11, after falling as low as $48.90 early in the day.
The market got no boost from the US December jobs report, with good job creation numbers and a fall in the unemployment rate to 5.6 per cent offset somewhat by a fall in wages, which some analysts interpreted as meaning little momentum for consumer spending.
In addition, German data showed sliding industrial output and exports, suggesting the eurozone’s largest economy is still in a weak patch.
“The move below US$50 (for Brent) shows how momentum is everything here,” CMC Markets analyst Michael Hewson told AFP.
“With no sign that OPEC will do anything about overproduction, it seems likely that we could well see further declines towards US$40 in the coming weeks — particularly given that demand shows no signs of picking up.”
Mining and minerals industry consultant Wood MacKenzie said in a report that it would take a fall below US$40 a barrel to force a significant amount of global production offline — which would strengthen prices.
“A Brent price of US$40 a barrel or below would see producers shutting in production at a level where there is a significant reduction of global supply,” they said.
