Oil Shocker! Near 12-Month Low & Dangerously Close to $30/bbl Zone

Last year Goldman Sachs warned of sub-$30 crude; after the turmoil in China, that’s not so outlandish after all.

Goldman Sachs warning of sub-$30 crude seem not so outlandish after all. (Photo: AP)

Last year Goldman Sachs warned that sub-$30 crude is likely. Other brokerages like Nomura and UBS echoed that view. and after the recent turmoil in China, that doesn’t seem too outlandish after all.

Oil prices fell for a fourth day on Thursday, lurching again to 12-year lows but rebounded slightly later in the day. But prices remain dangerously close to the dreaded $30 per barrel handle. This comes in the backdrop of the market tumult and economic slowdown in China. In fact, oil has fallen every day this year, losing nearly 10 percent.

On Friday, global benchmark oil futures rallied more than 2 percent following some semblance of calm in China and consequently the rest of Asia, but chart-watching oil analysts said if oil prices do not rally hard on Friday, they seem doomed to drop below $30 a barrel for the first time since 2003.

<p>Oil remains under pressure amid concerns about China’s economy. With rising Middle East tensions now a distant memory, oil is likely to test the $30 a barrel level amid growing concerns on the impact of a weakening yuan on Chinese demand.</p>

<b>ANZ note </b>

Natixis said in a research note that global demand should increase by 1.1 million barrels per day (bpd) as opposed to 1.7 million bpd in 2015.

<p>There are several clouds on the horizon which may impact demand growth such as the potential slowdown in China and any other emerging markets.</p>

US government data on Wednesday showed a 10.6 million-barrel surge in gasoline supplies, the biggest weekly build since 1993, rattling investors already concerned by near-record production and massive stockpiles around the world.

Brent crude settled down 48 cents at $33.75, after sliding to a low of $32.16, a level last seen in April 2004.

US Crude West Texas Intermediate finished down 70 cents at $33.27, after hitting a low of $32.10, the lowest since late 2003.