Brent crude oil hit a fresh five-year low close to $60 a barrel on Monday after producer group OPEC restated its determination not to cut output despite a global fuel glut, but the North Sea benchmark later rallied to above $62.Market momentum appeared to be downwards, with analysts saying oil could plumb new depths before a sustained recovery.
Oil prices have collapsed over the last six months as high-quality, light crude from North America has overwhelmed demand at a time of lacklustre global economic growth.
The Organization of the Petroleum Exporting Countries has kept production steady, worried that any reduction in its output would have little impact on price and instead mean surrendering market share.
“The decision has been made. Things will be left as is,” OPEC Secretary-General Abdullah al-Badri told a conference in Dubai on Sunday. “We agreed that it is important to continue with production (at current levels) for the … coming period.”
Analysts have cut oil price forecasts sharply over the last few weeks.
“Oil prices may move below $60 per barrel in the near term,” analysts at Barclays Bank said, but added that “this (level) is not sustainable in the long run”.
Barclays said it expected Brent to average $67 per barrel in the first half of 2015 and $78 in the second half of next year.
