Oil still hasn’t found the bottom.
Brent crude broke through the symbolic 7-year low mark of $36.20 (£24.29) in overnight trade on Monday to touch an 11-year low of $36.18 (£24.27) a barrel, down 1.9% from Friday’s close.
Now it’s even lower, down 1.36% at $35.16 at 7.50 a.m. GMT (2.50 a.m. GMT).
West Texas crude oil, the US measure of oil prices, is also getting crushed. Crude is currently down $0.41, or 0.93%, at $35.66 (£23.93).
Prices keep falling because of one simple reason — the market is saturated with oil right now. OPEC is pumping out cheap oil in a big to strangle the US’s nascent shale oil boom by making production prohibitively expensive for many operators.
But, as CLSA’s Christopher Wood pointed out in a note over the weekend, the efforts have so far had relatively little effect. US crude production has fallen by just 4.5% since its peak in June, even while oil prices have fallen by over 40%.
CLSA is predicting we’ll get to $20 (£13.40) oil. We certainly haven’t found the bottom yet.
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