Crude prices that reached its eleven year low and trading near to early $30s may fall to new lows. According to ace forecasters, decline of the world’s largest commodity buyer- China, may push oil to the new lows.
Morgan Stanley has predicted that China’s economic uncertainty and its spread effect on the rest of the Emerging Markets may bring down crude prices to $20.
In the past, investment bankers and rating agencies have made varied prediction for the future price path of crude extending from $20 to $80.
Other major trackers of crude –Bank of America, Goldman Sachs, Citigroup and Merrill Lynch also reported that a scoop to $20s is very possible.
Crude prices were going at $100 per barrel after the financial crisis period from 2008 to 2014.
During the last one year it has fallen to nearly one fourth of the six year average.
International market trends indicate that the factors that control oil prices become unpredictable. Various combinations of political and economic factors are creating price effects. Historically, political uncertainties ruled prices when the world economy was moving and crude was trading high.
Now with economies slowing and crude prices sliding lower, political factors and related uncertainties have minimum effects.
In the medium term future, oil price will be driven by positive and negative shocks emanating from China and its developing peers. If it is so, crude touching to $20 after a decade is a near possibility.
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