Unseasonally warm winter weather and high global production combined today to push the price of North Sea crude oil to its lowest wholesale price for for more than 11 years.
Benchmark Brent crude sank to $36.05 a barrel – its weakest since July 2004 – before recovering slightly to $36.56
In December 2014, the price of Brent stood at about $60-barrel, while in June 2014, it stood at $115-barrel.
In December 2015 alone, the price of Brent crude has slumped by 19%.
With no let-up in sight of the formerly dominant OPEC cartel of mostly Middle East Arab oil-producing nations easing back on output to maintain prices, and with the US shale oil industry becoming more efficient – thereby acting as a cap on market prices – analysts are mostly bear-ish for 2016.
The global economic slowdown has also cut Chinese demand for oil, while at the same time, Iran in gearing up to start exporting again after the lifting of oil sanctions.
Phil Flynn, an analyst at Price Futures Group commented: “The fundamentals are pretty bearish. Warm temperatures are killing the markets right now and the oversupply is weighing on prices.”
Meanwhile, Shell has confirmed that it is now taking the next steps in the process of merging with BG – which the oil giant has already announced would trigger thousands more oil job losses as operators continue to cut capital investment in exploration.
Shareholders will be asked to vote in favour of the deal next month.