Monday, December 21, 2015

An update on oil prices

by Bill McBride on 12/21/2015 10:59:00 AM

From the NY Times: Oil Prices Slump to 11-Year Lows in Asia and Europe

Oil prices hit 11-year lows in Asia and Europe on Monday, as a glut of crude on world markets and the recent global climate accord continue to depress fossil-fuel prices.

Brent crude oil, the international benchmark, was trading at $36.50 per barrel in late European trading.
In a recent report, the International Energy Agency said it expected global inventories to keep growing at least until late 2016, although at a much slower pace than this year. “As inventories continue to swell into 2016, there will still be a lot of oil weighing on the market,” the agency said.
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 $34.46 per barrel today, and Brent is at $36.62

Prices really collapsed a year ago - and then rebounded a little - and have collapsed again.  There are many factors pushing down oil prices - more global supply (even as shale producers cut back), global economic weakness (slowing demand), and warm weather in the US (less heating demand) to mention a few.