The free-fall for oil prices may be near an end, although markets are still bracing for a tough first half of 2015 for crude. On the New York Mercantile exchange crude oil futures for January delivery settled at $57.81 Friday, propelled lower by the latest cut in forecasts for global demand in 2015. Weekly losses for New York-traded oil topped 12%.“I’m surprised we’ve gone this low, I’ll admit” said Michael Lynch, president of Strategic Energy & Economic Research. “But we are getting pretty close to the point that someone like Venezuela goes to the Saudis and says, ‘we have to cut production, please help us out.’”
In the three weeks since OPEC decided to keep its production the same, choosing to defend market share against higher-cost producers in the U.S. and elsewhere, oil futures have lost nearly 25% of their value. Moreover, from a peak in June, prices have fallen more than 45%.
The Saudis are still “the coach of OPEC’s team,” but the more financially strapped OPEC member countries like Iran, Venezuela, or Nigeria are likely to start to pressure for at least modest, isolated cuts if prices remain this low, Lynch said.