MOSCOW (Sputnik), Alexander Mosesov — The current vulnerability of the global oil market makes predicting near-term prices difficult, a commodity analyst for UBS' Chief Investment Office (CIO) told Sputnik on Tuesday.
On Monday, US West Texas Intermediate (WTI) crude and Brent crude futures tumbled to a 12-year low amid the continued oil price slump caused by global overproduction and new concerns about the stability of the Chinese stock market.
"The high vulnerability of the oil market toward even lower prices, whereby production is forced to shut down, makes the near-term price bottom difficult to call. Only extremes seem to discourage production and motivate the capital market to pull out," Giovanni Staunovo said speaking on behalf of the department.
"With a surplus of 1.0-1.5 mbpd [millions barrels of oil per day] in 1Q16, oil prices remain highly vulnerable to negative sentiment. In search of a bottom, Brent and WTI prices are ready to drop below $30 per barrel in 1Q16," he said.
Earlier on Monday, the Organization of the Petroleum Exporting Countries (OPEC) stated that its Reference Basket of petroleum blends had fallen by 4.88 percent in value, reaching the same level as October 1, 2003, or $27.07 per barrel.
Recent turbulence in the Chinese stock market has caused a knock-on effect across the world. China's decision to suspend trading last week was followed by Wall Street stocks sliding by one percent and European stock markets slumping by two percent.
