Tuesday, December 22, 2015

Brent crude skids to 10-year low of $36.05/barrel

Brent crude prices plummeted to a decade-low of $36.05 a barrel as inventory continued to rise with the relentless increase in global production. This trend could pull down prices further in 2016. The current Brent prices are below the low of $36.20 seen during the financial crisis in December 2008.

Even though demand has been robust this year, crude inventories have risen to over one million barrels a day with storage tanks filling quickly and ships queuing up at key ports around the world, said analysts.

Oil stocks in the developed world have ballooned to almost three billion barrels — or more than a month of global oil supplies, according to a report by the International Energy Agency.

The global inventory is expected to rise next year with higher exports expected from Iran as the economic sanctions are lifted.

At the same time, demand growth is likely to slow with major markets struggling to shrug off the recessionary trend.

However, India, one of the largest importers of crude, will be the major beneficiary if the rupee holds against the dollar. Any depreciation of the rupee will eat into the benefits of a fall in crude prices.

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