Oil markets seeing red as crude price keeps falling

Oil markets had little to celebrate over the New Year as the crude price meltdown continued. Brent was trading at $48.46 per barrel (/b) and WTI at $46.39/b as Petroleum Economist goes to press.

Saudi Arabia has stuck steadfastly to its pledge not to cut production to stem the price decline, leaving the market in unfamiliar territory. Oil minister Ali Al-Naimi even mused in an interview that oil prices might never return to $100/b. With Saudi staying on the sidelines, most analysts are now closely parsing US oil supply data for signs of an imminent production slowdown. There are no indications of that as yet, leaving the market guessing where the price floor will be. The emerging consensus coming from analysts is that prices will continue to fall through the first half of the year, triggering a supply reduction from the US. The price bounce-back, when and if it comes, should start i