By Georgi Kantchev
LONDON--Oil prices slid on Wednesday on reports of another surge
in U.S. oil supply while major banks continued to slash their price
forecasts for this year.
Barclays and Credit Suisse lowered their estimates seeing little
respite for crude prices which have shed more than 55% since a peak
in June.
March-dated Brent crude, the global oil benchmark, was down 0.6%
at $49.30 a barrel on London's ICE Futures exchange. On the New
York Mercantile Exchange, light, sweet crude futures traded at
$45.44 a barrel, down $0.79 from Tuesday's session.
Late Tuesday, the American Petroleum Institute reported that
weekly U.S. oil inventories rose by 12.7 million barrels. The
market is looking for the more reliable U.S. Energy Department
inventory data due later Wednesday, with analysts polled by The
Wall Street Journal forecasting a four-million-barrel increase in
weekly oil stockpiles.
Oil production in the U.S. has surged in recent years on the
back of a shale boom that has added to much of the global oil
oversupply and pushed oil prices to their lowest in more than 5 1/2
years.
On Wednesday, Barclays slashed its oil price forecasts for this
year by around 40% saying it expects a long period of oversupply
stretching at least into early 2016. The bank cut its average price
estimate for Brent to $44 a barrel from $72 and for WTI to $42 a
barrel from $66.
"We expect to see further downside to prices in the next few
months, with both contracts likely to trade into the high $30s
before the oil price decline is arrested," Barclays said.
Credit Suisse also cut its average price forecast for Brent this
year to $58 a barrel from $75.25, saying oil prices could recover
by the end of the year, although the shape of the recovery is
harder to forecast.
"There is a much greater degree of uncertainty in the dynamics
that will shape the physical crude demand-supply balance and crude
pricing than we have seen in recent history," said David Hewitt,
managing director and co-head of oil research at Credit Suisse.
Financial markets are also watching the U.S. Federal Open Market
Committee's meeting statement later Wednesday for signs of how
policy might affect the dollar.
The greenback's rally in recent months has further weighed on
dollar-denominated commodities such as oil as they become more
expensive for holders of foreign currency.
Nymex reformulated gasoline blendstock for February--the
benchmark gasoline contract--rose 0.8% to $1.3604 a gallon, while
ICE gas oil for February changed hands at $477.75 a metric ton, up
$2.50 from Tuesday's settlement.
Eric Yep contributed to this article.
Write to Georgi Kantchev at georgi.kantchev@wsj.com
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