Oil ends 2015 in downbeat mood as price outlook remains bleak

Oil prices sank Wednesday after an unexpected rise in U.S. commercial crude stockpiles reinforced worries about the prolonged global oversupply.

Inventory data from the US Energy Information Administration (EIA) added to what was an already tough morning for crude oil futures on Wednesday.

Goldman Sachs has been widely cited as forecasting oil dropping to $20 a barrel, although its report on the matter actually said: “While not our base case, the potential for oil prices to fall to [cost-of-production] levels, which we estimate near $20 per barrel, is becoming greater”. Inventories of crude oil in the United States stand near eight-decade highs as producers continue to produce at high rates to maximise profits in a low-price environment.

Futures have lost 32 percent this year, poised for a second annual loss that exceeds the magnitude of the slump during the Asian economic crisis from 1997 to 1998. Still, the agency warns that this prediction is unreliable since the oil market is probably going to be pretty volatile next year.

Investors are now confident that OPEC is attempting to pump out the competition, and hence the prices of crude oil are expected to slide downwards way into the next year as well, said Tim Evans, an energy analyst with Citi Bank. USA crude imports averaged 7.9 million barrels per day last week, up by 566,000 barrels per day from the previous week. Oil prices began falling in mid-2014 as ballooning output from the OPEC, Russia and USA shale drillers started to outpace demand.

Crude oil prices were largely unmoved in Asia on Thursday as a supply glut and continued strong production are likely to keep prices in the doldrums into 2016.

The downturn has caused pain across the supply chain, including shippers, private oil drillers and oil-dependent countries from Venezuela and Russian Federation to the Middle East.

Murphy Oil of El Dorado slashed its 2015 budget by about 30 percent and said in October that by the end of 2015, its workforce would be reduced by about 23 percent from 2014 levels. Trading volumes are expected to remain light in the final few days of the year, reducing liquidity in the market. The share price is now -9.75 percent versus its SMA20, -23.73 percent versus its SMA50, and -54.48 percent versus its SMA200.

From the 2008 top, the price of WTI Crude Oil could be tracing out a sideways consolidation.

A Kuwaiti stock trader monitors the stock market activity at the Kuwait Stock Exchange (KSE) yesterday on the last trading day of 2015. The share price is now -13.67 percent versus its SMA20, -25.19 percent versus its SMA50, and -42.12 percent versus its SMA200.

Nigeria’s Minister of State for Petroleum Resources, HE Dr. Emmanuel Ibe Kachikwu who presided over the 168th meeting last week in an optimistic laden address, predicted a world oil demand growth of 1.3 million barrel per day next year to average 94.1 million barrels per day. The stock is up 2.23 percent from its 52-week low and -59.84 percent versus its peak.

Brent crude was up $1.34 at $36.80 a barrel by 1:18 p.m. EST (1818 GMT), rebounding from a near 11-year low of $36.10 earlier in the session.