The worsening economic situation in Europe could bring Brent crude prices down to $50 per barrel this year, according to research prepared by Credit Suisse.
“Oil demand would deflate sharply following an acute crisis in confidence,” say Credit Suisse analysts Jan Stuart and Stefan Revielle. They predict the new phase of economic crisis to start over the summer, The Daily Telegraph reports.
The situation could become tougher than in 2008 as “global imbalances are worse and much of the available political and real capital has merely been squandered in the interim”.
However many experts estimate the $50 forecast as highly unlikely. “We have seen oil at $50 per barrel level, it’s not out of the broad realm of possibilities, but I find it difficult imagining that within the existing supply-demand environment, anyone would be taking $50 a barrel as their base case assumption,” Ilya Balabanovsky, senior oil and gas analyst at Renaissance Capital, told RT.
“At $50 dollars we can talk about broad global economic collapse. I don’t think we are anywhere close to that,” he added.
Meanwhile oil traded near the lowest closing price in eight months in New York before the Organization of Petroleum Exporting Countries (OPEC) meeting in Vienna. Brent oil for July delivery dropped 39 cents to $96.74 a barrel on the London-based ICE Futures Europe exchange, while the August future fell 40 cents to $96.32.
OPEC member, Venezuela is calling for a cut oil production to support prices. “There is overproduction, and the economic situation is bad in the euro zone,” Rafael Ramirez, the country’s Energy Minister said in an interview. “The market has a lot of oil.”
However, on Monday Brent crude grew $1.06 to $98.20 as the US Energy Department reported the country’s stockpiles had seen a surprise fall of 191,000 barrels to 384.4m barrels last week.