Likelihood of U.S. Oil Sliding to $30 a Barrel Is Increasing


As U.S. oil fell to a six-year low below $41 a barrel on Wednesday, an increasing number of analysts and traders are saying crude could drop into the $30s—and soon.

The move to a price last seen at the height of the financial crisis, in February 2009, could come amid a seasonal falloff in demand, coupled with concerns about the Chinese economy and the continuing global glut of crude. Cheaper oil would bring further joy to consumers and businesses around the globe, but more pain for everyone from Russian budget officials to U.S. shale-oil drillers. It would also test the limits of oil storage facilities around the globe, which are already filling up to the brim.

“Given where we are now, there is a 90% likelihood that we will dip into the $30s,” said Chris Main, oil strategist at Citigroup Inc.

A 40% price rally in the spring took oil to above $60 a barrel, offering hope that the worst of oil’s yearlong slump was over as investors bet that low prices would lead to cuts in production big enough to balance the market. (by GEORGI KANTCHEV, Wall Street Journal)