On Monday Brent and U.S. (WTI) crude dropped over 3 percent due to global oversupply concerns along with a report showing weaker industrial production in Japan.
This morning WTI is currently trading up 2.42 percent and is $37.73 a barrel (Feb 2016 contract).
Tumbling crude oil prices in 2015 have negatively impacted commodities and the energy sector in a year when the U.S. dollar appreciated significantly.
Tom Klouza, Global Head of Energy Analysis at (OPIS), told CNBC’s “Squawk on the Street” last Thursday that he believes crude prices could fall further and touch December 2008 levels.
“I suspect that this rally that we are seeing in the last couple of days is a little bit of a foolish rally. And we’ll retest the lows late in February, March, when refineries go to maintenance, so I still think we’re going to test that December 2008 level of $32.40 to $33″ Klouza said.
“I don’t suspect we will get beneath it, but you never know” Klouza added.
World growth is expected to increase slightly in 2016.
In October the IMF provided a 2016 global growth forecast of 3.6 percent.
On December 2nd Goldman Sacs Global Research published a forecast of 3.5 percent global growth in 2016 and stated their base case is that oil does not breach storage limits and WTI ends the year higher at $52.00/bbl.
Goldman Sachs Global Research believes that commodity prices will remain “lower for longer” and noted that steel will be hit hardest by China’s rebalancing.