Tuesday, January 12, 2016

An update on oil prices

by Bill McBride on 1/12/2016 02:54:00 PM

From the WSJ: U.S. Oil Prices Sink Below $30 a Barrel, First Time Since ’03

Oil tumbled below $30 a barrel on Tuesday, underscoring the global economy’s difficulty with absorbing a relentless flood of crude supplies.
The benchmark U.S. oil contract has dropped from $40 a barrel to $30 in just one month, and the pace of the selloff has rattled stock, bond and currency markets from Moscow to Riyadh to New York. Oil is down more than 70% since last trading in the triple digits, back in June 2014.
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 $30.20 per barrel today, and Brent is at $30.60

Prices really collapsed at the end of 2014 - and then rebounded a little - and have collapsed again.  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.