Oil fell to $47 a barrel this week, the lowest since early 2005. And the “path of least resistance is down”, says Michael Fitzpatrick of MF Global on Bloomberg.com.
There is now talk of global oil demand shrinking for the first time in 25 years, and this week’s poor American manufacturing data foreshadows a further decline in demand from the world’s biggest consumer of oil.
Opec’s deferral of a further production cut late last week has also provided downward momentum of late; it seems some members won’t approve further supply cuts before others fulfil previous commitments to trim output.
Opec has “a spotty record” managing oil supplies, says Spencer Schwartz in The Wall Street Journal, and with demand plunging it may be particularly difficult this time round.
Michael Lewis of Deutsche Bank now reckons oil could slide to $30-$35 a barrel next year.