Crude oil prices lost 10% for a week

The crude oil prices remained under pressure in the last trading week ended last five sessions of deep red territory. The 12-year peak of USD and the record high oil stocks were the main reasons for weekly loss. The futures on US WTI crude oil with delivery in April ended Friday’s session with a decrease of 9.61% to 44.84 USD per barrel after the level of 49.61 USD per barrel a week earlier. Meanwhile the futures on Brent oil also with delivery in April posted a weekly loss of 8.47% to 54.67 USD per barrel, having closed at 59.73 USD per barrel on 6th March 2015.

The dollar index ICE was traded near its highest level since April 2003, buoyed by expectations that US interest rates will be raised in June this year amid steady economic recovery. This has put pressure on crude oil prices in view of the inverse relationship between commodities traded in dollars and US currency. The stronger US currency makes dollar-denominated commodities less affordable for holders of other currencies.

Adding more to the negative sentiment in the oil market, stocks of crude oil in USA increased by 4.51 million barrels in the week ended on 6th March. The growth was ninth, bringing the total volume of stocks in the largest economy in the world rose to 448.9 million barrels, which is the highest in history.

“The Crude oil prices should gradually recover in the coming years, but the big mining will keep them far below 100 USD per barrel in the foreseeable future. Our main forecast for Brent in 2020 is still only 70 USD, as it was back in 2012”, commented experts from Commodity Trends Journal.

Last week, analysts at Goldman Sachs said it is likely the price of WTI to fall to 40 USD per barrel in the near future amid continuing rise in world crude oil reserves.

“Although we continue to forecast a significant recovery in demand in 2015, we believe that consistent weakness in late winter will lead to more consistent slowdown in demand”, added the American bank.

Also last week the Ministry of Energy of the United States said that the price of WTI is likely to average 52.15 USD this year, and not projected until now 55 USD. The reason is that the production of crude oil in the world exceeds demand by almost 1 million barrels per day. Much of the growth comes from outside 12-member cartel OPEC.