Thursday, February 11, 2016

An update on oil prices

by Bill McBride on 2/11/2016 03:31:00 PM

From the WSJ: U.S. Crude Settles at 13-Year Low on Oversupply Fears

Oil prices settled at their lowest levels since 2003 as growing stockpiles in the U.S. and continuing worries about falls in the wider financial markets keep oil in the red.

Light, sweet crude for March delivery settled down $1.24, or 4.5%, to $26.21 a barrel on the New York Mercantile Exchange, the lowest settlement since May 2003.

Brent, the global benchmark, declined 2.5% to $30.06.
Oil PricesClick on graph for larger image

This graph shows WTI and Brent spot oil prices from the EIA. (Prices today added).  According to Bloomberg, WTI is at $27.08 per barrel today, and Brent is at $30.72

Prices really collapsed at the end of 2014 - and then rebounded a little - and then collapsed again.  Prices are now at the lowest since 2003 (even lower than during the Great Recession).

There are many factors pushing down oil prices - more global supply (even as some shale producers cut back), global economic weakness (slowing demand), strong dollar, and warm weather in the US (less heating demand) to mention a few.