Oil companies should brace themselves: the black stuff's slump is set to be long-term, according to the US Energy Information Administration (EIA), which just lowered its oil price forecast through to the end of next year.
Although prices rallied briefly yesterday on bullish US economic data, the EIA thinks this recovery is unlikely to last.
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US benchmark West Texas Intermediate (WTI), currently trading at $42.62 per barrel, recently crashed through its $42 floor to trade at a six-year low. According to the EIA’s new gloomier outlook, it’s unlikely to recover significantly within the next year.
The agency is expecting WTI to trade at an average of $49 per barrel in 2015 and $54 in 2016, after it lowered its forecast over an uncertain global oil market:
Concerns over the pace of economic growth in emerging markets, continuing (albeit slowing) supply growth, increases in global liquids inventories, and the possibility of increasing volumes of Iranian crude oil entering the market contributed to the changed forecast.
The global benchmark Brent crude is trading at $48.81 per barrel.