Crude-oil futures were down in Asian trade Monday and traders
expect oil prices to stay volatile this week with little evidence
of stronger demand or tighter supply to support a solid
rebound.
On the New York Mercantile Exchange, light, sweet crude futures
for delivery in February traded at $48.40 a barrel in recent trade,
down 29 cents in the Globex electronic session. March Brent crude
on London's ICE Futures exchange fell 33 cents to $49.84 a
barrel.
The two main oil benchmarks ended last week on a mixed note.
Nymex February crude gained 0.7% last week, snapping a seven-week
losing streak. Brent crude for March lost 2.2% last week and has
been down for eight consecutive weeks.
"Despite a nearly 60% fall in oil prices since mid-2014, oil
market balances remain weak, with prospects of a recovery looking
dim until the latter months of 2015, in our view," Barclays
analysts said in a report over the weekend.
The precipitous decline in oil prices is hitting oil companies
globally. Over the next few days oil and gas majors will announce
quarterly earnings, and market participants expect more spending
cuts and job losses to materialize. However, the spending cuts may
take a few months to filter through to actual oil production and
prices.
For this week the European Central Bank's decision on
quantitative easing and a range of other macroeconomic data
releases will affect sentiment in global financial markets.
"The effect of ECB's QE move on oil prices will be in terms of
currency movements," analyst Daniel Ang at Singapore's Phillip
Futures said.
He said if the euro weakens relative to the U.S. dollar, it
could put more downward pressures on oil prices, although the
market seems to be already pricing in an ECB move.
Meanwhile, J.P. Morgan was the latest bank to slash its forecast
for oil prices in 2015 and said it expects to see a U-shaped
recovery in oil prices to $90 a barrel in 2019.
"We see significant oil oversupply with risk that Brent falls
below $40 a barrel in the near term should the oil market not be
able to accommodate a 1.6 million-barrel-a-day surplus," it said,
adding that oil prices could trough in March at an average of $38 a
barrel.
J.P. Morgan cut its 2015 average Brent crude price forecast to
$49 a barrel from $82 a barrel, and its 2016 average forecast to
$56.8 a barrel from $87.75 a barrel.
Nymex reformulated gasoline blendstock for February--the
benchmark gasoline contract--rose 18 points to $1.3606 a gallon,
while February diesel traded at $1.6649, 7 points lower.
ICE gasoil for February changed hands at $478.50 a metric ton,
up $6.25 from Friday's settlement.
Write to Eric Yep at eric.yep@wsj.com
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