Crude now @ $50.04 per barrel
US crude closed down $2.65, or 5 percent, at $50.04 a barrel.
Brent crude is now around $53 a barrel, down about $3, after dropping to $52.66
Saudi Arabia reduced its official price for light oils by $0.60 per barrel in the U.S. and has made further cuts to its monthly oil prices for European buyers.
OPEC’s (Organization of the Petroleum Exporting Countries) strategy of standing back and letting the market determine price has helped drive oil down further and faster than many expected. It is widely believed that the Saudi price cuts announced Monday are an effort to regain market share, particularly in Europe. The loser will be the West African producers who are already struggling from the lower Oil prices.
In the US there are concerns of oversupply in high quality U.S. shale crude.
In Russia the oil output hit a post-Soviet high in 2014, averaging 10.58 million barrels per day (bpd) but sanctions imposed by the west is crippling their economy.
With such a high level of crude available to the market oilandgaspress.com feels that prices will drop to around $35/barrel before its starts to rise again levelling off at $60/barrel by the end of 2015 ceteris paribus.
The market forces are finally determining the cost of crude and this is good for consumers and manufacturing industries. The competion for market share by Saudi, Russia, Iran, US and other OPEC members is healthy for business and market realignment. After all its all about supply and demand.