Crude oil prices follow steep drop in Japanese stock markets after latest efforts from the Bank of Japan to push the economy forward. Pool Photo by Mohamad Torokman/UPI |
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NEW YORK, Dec. 18 (UPI) -- Lingering pessimism over the chance of recovery in the energy market helped add downward pressure to crude oil prices in early Friday trading.
A research note from Goldman Sachs said that, much as was the case last year, oil prices are falling after the latest meeting of ministers from the Organization of Petroleum Exporting Countries. OPEC in November 2014 kept production targets steady despite steep declines in crude oil prices. OPEC ministers left their regular meeting in early December with a wait-and-see approach and prices have fallen steadily since.
"Although prices are now below our three-month forecast for $38 per barrel for West Texas Intermediate, we still see high risks that prices may decline further, as storage continues to fill," the bank said in its latest note.
Crude oil prices increased in overnight trading after the Bank of Japan moved again to put more momentum behind Prime Minister Shinzo Abe's growth plans. After an initial rally, the Japanese benchmark Nikkei Stock Average closed down nearly 2 percent Friday.
West Texas Intermediate, the U.S. benchmark price for crude oil, was down about 0.5 percent in early Friday trading to $34.78 per barrel. Brent crude oil was off a half percent to $36.86 per barrel at the start of trading in New York.
Crude oil prices are off roughly 10 percent since OPEC's last meeting in early December. In the past, the production group, now 13 strong with the inclusion of Indonesia, said it needed to keep output steady to meet the expected demand from Asian economies.
Japan reported gross domestic product shrank at an annualized rate of 0.8 percent for the two-month period ending in September. That follows a second quarter contraction of about 0.7 percent, formally pushing Japan, the world's third-largest economy, into recession for the second time in two years.
Goldman in its latest research note said crude oil prices may need to hit $20 per barrel before a balance between supply and demand returns. OPEC ministers said balance could return at some point in late 2016.
