Oil price movement
The first Monday of the year saw the US benchmark touching below $50 before slightly rebounding for the first time since April 2009. This was a signal that surging supplies will continue to drive prices lower in 2015.
Prices extended their losses from last week after Iraq, the second-largest producer in OPEC (Organization of the Petroleum Exporting Countries), said it plans to boost crude exports to 3.3 MMbbls (million barrels) per day this month, the highest since the 1980s.
Even as Russia’s output reached a post-Soviet high, the dollar climbed against the euro, keeping the pressure on crude oil prices. Investors’ concerns over Greece potentially exiting the Eurozone also helped drive prices lower.
WTI (West Texas Intermediate) prices closed at $50.04 a barrel, 5% lower than the previous market close. Brent prices fell ~6% to close at $53.11 on Monday.
Prices touched fresh five-year lows on Tuesday, falling under $50, making it the fourth consecutive decline. With no bullish expectations and an expectation of an inventory build of 700,000 for the week ended January 2, prices continued to take a beating.
WTI prices fell 4% to $47.93 on Tuesday. Brent prices fell almost by the same to close at $51.10.
On Wednesday, however, prices slightly rose after the U.S. Energy Information Administration’s (or EIA) bullish crude inventory report, which showed that stocks decreased unexpectedly.
The increase in gasoline and distillate stocks muted the effect of the surprise decrease in crude inventories. Both refined products were at their highest levels in the past three to four years.
Both grades of crude rose on Wednesday. WTI prices closed at $48.65. Brent prices closed at $51.15.
ETFs that have these companies among their top holdings, such as the Energy Select Sector SPDR ETF (XLE) and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), will also feel the pressure of weak crude prices.
Continue on to the following part to read about EIA’s forecasts for 2015 oil prices as well as production and demand projections.