The price of oil has held steady after falling 3 percent post-Christmas, with the outlook for 2016 looking bleak for the sector.
US Crude is currently at $36.60 a barrel, with Brent at $36.46. Both benchmarks have fallen by a third this year to levels not seen in over a decade.
There is contention in the industry as to how oil will look in 2016, with Goldman Sachs saying $20 a barrel prices may be necessary to rebalance the market. At the end of last year, analysts expected a price recovery in 2015, whilst traders betted on a continued fall – they, of course, were right. This year a similar stance is being taken, with analysts expecting a price recovery towards the end of 2016, with production falling as drillers succumb to debt and low revenues. However, traders are disagreeing.
OPEC have continued to fail to control demand, leading to the amount of oil on the market far outstripping supply. So far, they are showing no signs of beginning to reign in production and losses have wiping out the gains from a decade-long commodity super-cycle sparked by China’s energy demand boom.
What will happen in 2016 remains to be seen.