Oil price could fall as low as $US43, Morgan Stanley says | Alternative Energy | Forums

If this is true, wonder what affects it will have on the economy, I know it will probably put a lot of small mom and pop gas stations and fuel delivery services out of business

Oil prices fell by more than a dollar on Monday to near their lowest levels since 2009 after Morgan Stanley cut its price forecast for Brent, saying oversupply will likely peak next year with OPEC deciding not to cut output.

"Without OPEC intervention, markets risk becoming unbalanced, with peak oversupply likely in the second quarter of 2015," Morgan Stanley said in a report.

Brent crude for January delivery dropped to a low of $US67.73 a barrel, near last week's trough of $US67.53 which was its weakest since October 2009. 

Morgan Stanley slashed its 2015 base case forecast for Brent to $US70 from $US98 a barrel and for 2016 to $US88 from $US102 a barrel. In its bear-case scenario, the bank sees the crude benchmark falling to a low of $US43 a barrel in the second quarter of next year.

Top oil exporter Saudi Arabia blocked calls from poorer members of the Organisation of the Petroleum Exporting Countries to reduce production at the group's meeting on November 27, fueling a further slide in oil prices which have lost more than 40 per cent since June.

"With OPEC on the sidelines, oil prices face their greatest threat since 2009, but we expect a volatile 2015 rather than a one-way trade," Morgan Stanley said in a report.

US crude fell 96 US cents to $US64.88 a barrel, after hitting a session low of $US64.63. West Texas Intermediate crude dropped to $US63.72 last week, its lowest since July 2009.

Last week, Saudi Arabia cut its monthly prices for crude it sells to the United States and Asia, a move that analysts say show it is stepping up its battle for market share.

Investors were also eyeing trade data from China with further evidence of economic weakness in the world's No. 2 oil consumer likely to pile more pressure on prices.

Reflecting lacklustre domestic demand, China's imports fell 6.7 per cent in November from a year earlier, coming in well below expectations and adding to concerns the world's second-largest economy could be facing a sharper slowdown. 

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