No chances for oil bulls

January 1, 2016

Oil prices show little fluctuations today on the background of the record high output and a slowing consumption pace. After a sharp plunge by 2.70% at yesterday’s session, Brent futures rose by $0.05 to $36.67 while WTI added $0.05 to $36.86 level as of 5:45 GMT.

The demand for hydrocarbons dropped in Europe for the first time in 10 months by 170,000 bbl. daily, comparing to last year. Meanwhile, diesel and gasoline consumption pace in China also slowed its growth, reports JBC Energy.

Since Chinese economy is slowing down and growth on emerging markets weakens, it is hard to expect any considerable increase in demand for energy resources. Oil prices will suffer even more in 2016 as there are few factors which can support them. As the US has removed the restrictions on Oil export, companies with lower output costs will attempt to fight for the market share. Analysts say that the difference between WTI and Brent can reach $1.

Iran’s Oil Minister Bijan Zangeneh said in his speech that Iranian Oil will enter the market on any conditions even if prices fallbelow the $30 level. It is likely that the global surplus will persist in 2016.

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