By Eric Yep
SINGAPORE--Oil futures fell in Asian trade Monday on nagging
concerns about oversupply, with Brent crude trading below $50 a
barrel after key oil brokerages slashed their price forecasts more
over the weekend.
On the New York Mercantile Exchange, light, sweet crude futures
for delivery in February traded at $47.73 a barrel at 0305 GMT,
down $0.63 in the Globex electronic session. It lost 8.2% last
week.
Brent crude for February delivery on London's ICE Futures
exchange fell $0.76 to $49.35 a barrel, after losing 11.2% last
week. Oil prices have fallen for seven weeks in a row and Brent
crude--the global oil benchmark--is down 57% from June 2014.
Oil markets opened this week on a bearish note, offsetting last
week's strong U.S. jobs data and reports of an explosion and fire
at a U.S. refinery operated by Canadian oil firm Husky Energy Inc.
on Saturday.
Over the weekend, Goldman Sachs and Société Générale joined the
list of brokerages to make further cuts to their oil-price
forecasts. Market participants have struggled to pin down a floor
price for oil after Saudi Arabia declined in November to support
prices by cutting its exports.
"The search for a new equilibrium continues," Jeffrey Currie,
head of commodities research at Goldman Sachs, said in a
report.
He said the capital markets that finance U.S. shale production
are now playing a more dominant role in oil markets, compared with
the usual physical supply and demand factors and derivatives
markets.
Oil prices will now have to remain lower for longer to choke off
the capital supply that sustains U.S. shale production, creating a
more U-shaped type of recovery, Mr. Currie said.
Goldman Sachs cut its average Brent crude forecast for 2015 to
$50.40 a barrel from $83.75 a barrel, and its WTI oil forecast to
$47.15 a barrel from $73.75 a barrel.
Société Générale also cut its oil price forecast for Brent crude
by $15 to average $55 a barrel in 2015 and for Nymex WTI crude by
$14 to $51 a barrel, due to the buildup in oil storage and
inventories in the first half of this year.
"Several persistent market forces continue to exert waves of
downward pressure on prices," Société Générale's head of oil
research Mike Wittner said in a report.
He said "very weak fundamentals" are being priced in for the
first half of this year, putting further pressure on current and
future prices, and impatient markets may force prices down to
levels where expensive crude production may be shut down in Canada
and the U.S.
Later this week, oil markets will be focused on monthly oil
market forecasts from the U.S. Energy Department, the Organization
of the Petroleum Exporting Countries and the International Energy
Agency. Any cuts to global oil demand forecasts for this year will
push oil prices down further.
China's oil import data is also expected on Tuesday. Analysts
expect its December oil imports to hit record levels, although
support for oil prices will likely be limited.
Nymex reformulated gasoline blendstock for February--the
benchmark gasoline contract--fell 57 points to $1.3175 a gallon,
while February diesel traded at $1.6983, 47 points lower.
ICE gas oil for January changed hands at $473.25 a metric ton,
up $4.25 from Friday's settlement.
Alistair MacDonald contributed to this article.
Write to Eric Yep at eric.yep@wsj.com
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