Crude oil skids 10% for the week; Goldman says more losses needed

Jan. 08, 2016 5:35 PM ETUCO, USO, OIL-OLD, DBO, USL, DTO, OLO-OLD, SCO, DNO, BNO, OLEM, UWTI, DWTI, SZOXFBy: Carl Surran, SA News Editor86 Comments
  • Crude oil fell for a fifth straight day en route to another 10% tumble on the week, despite data that showed a decline in active U.S. drilling rigs; traders are dismissing signs of slowing work because the reduction has not translated to lower production, WSJ reports.
  • The world’s glut is likely to worsen in coming months from seasonal additions to stockpiles, new supplies are on the way from Iran after the end of sanctions, and tensions between Iran and Saudi Arabia could lead to higher oil output as the two countries compete against one another, according to Tariq Zahir of Tyche Capital Advisors.
  • Many chart watchers now see crude sliding below $30/bbl; unless Brent rebounds quickly above $38.99 and WTI tops $38.40, their intraday highs from the first day of trading this year, it has much further to fall, Kase & Co. analyst Dean Rogers predicts.
  • Goldman Sachs maintains that more losses are needed to force producers to cut supplies enough to balance the glut and weak demand outlook in the market; the firm, which has said oil could hit $20, said in a note today the market needs to see sustained low prices through Q1 "so producers will move budgets down to reflect $40/bbl oil for 2016."

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