Oil prices fell to their lowest since the third quarter of 2017 today, heading for losses of more than 10% in a week, as global oversupply kept buyers away from the market ahead of the long festive break.
Brent crude fell 77 cents to a low of $53.58 a barrel, its weakest since September 2017, before rallying to trade around $53.75, down 10.8% on the week, by 1055 GMT.
WTI was down 20 cents at $45.68, also on course for a decline of 10.8% for the week, Reuters reported.
A leading analyst of the National Energy Security Fund, a lecturer at the Financial University under the Government of the Russian Federation, Igor Yushkov, speaking to Vestnik Kavkaza, noted that prices are falling in anticipation of the new OPEC + deal's entry into force. "The agreement will take effect in January, causing a new decline in oil output in the participating countries. At the same time, the accumulated effect of investments made at prices of $80-86 per barrel, primarily in U.S. shale projects, will continue to maintain an oversupply in the market. In addition, the New Year holidays are coming, and traders are selling assets," he explained.
"In this regard, we can easily see oil at $50 per barrel before the New Year. If panic begins, like it happened in November, prices can drop to $45 per barrel. And after the New Year, we should expect growth," Igor Yushkov warned.
"There will be no rapid growth back to $70 per barrel. The agreement implies a gradual reduction in oil output. Therefore, a significant jump can only be caused by something else, for example, any agreement in the framework of the U.S.-China trade war. If they agree, it is assumed that China will actively develop its economy, its oil demand will grow, which means one needs to buy futures while they are cheap, which nay cause a significant price increase," the leading analyst of the National Energy Security Fund stressed, adding that the oil price will notably increase only in March, when the sanctions against Iran comes in force.
