Global price hits its lowest point since 2004

Source: By Puko/Baxter, Washington Post • Posted: Tuesday, December 22, 2015

Brent crude oil prices fell to their lowest trading points since July 2004, while U.S. oil prices recently fell below $34, the lowest since 2009. At the same time, neither the United States nor Saudi Arabia looks to be slowing production.

“There’s no change,” said Scott Shelton, broker at ICAP PLC. “It’s not a very good picture until demand starts to come around.”

Even as oil reserves continue to build and prices continue to fall, U.S. producers put 17 rigs back online last week, and Saudi Arabia’s October crude exports were the highest in four months, according to data released over the weekend.

This continued the battle between the United States, which is improving production efficiency, and Saudi Arabia, which is hoping to slow oil output in the United States and Russia. Analysts believe the prices could take even longer than expected to recover.

Goldman Sachs Group Inc. said in a statement released yesterday it now believes oil production will fall less than expected next year. And the United States’ competition with Saudi Arabia may worsen after President Obama signed a law Friday that removed the ban on U.S. oil exports.

“Having breached the lows seen during the financial crisis in 2008, the recent price pressure was attributed to last week’s final approval of U.S. legislation, which lifted the 40-year ban on crude exports, which will only see more crude oil flood the global market,” said Kash Kamal, a senior research analyst at Sucden Financial Ltd.

As production continues to hold as high as it is, U.S. government forecasters are expecting it to take longer and longer for prices to recover.