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World bank: Oil below $30 not justified by fundamentals

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 27, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Bali) - The World Bank's quarterly Commodity Markets Outlook, published today, notes that Oil prices below $30 are somewhat below levels that would appear to be warranted by fundamentals.

    Key headlines

    Oil prices, which registered the largest decline, continued to slide in 2016 to below $30/bbl in mid-January, somewhat below levels that would appear to be warranted by fundamentals, on prospects for continued abundant supplies and concerns about weak demand

    In addition to high stocks, OPEC reaffirmed its market share strategy at its December 2015 meeting, and exports from the Islamic Republic of Iran are expected to rise sharply as sanctions that had hampered oil sector investment and exports have been lifted.

    U.S. crude oil production continued to fall from its peak in April 2015, but the decline has been slower than expected owing to efficiency gains and cost reductions

    On the demand side, the oil price drop of 2015 encouraged consumption growth, but this was tempered in the fourth quarter by mild temperatures in the northern hemisphere reducing heating oil demand.
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