Oil prices are continuing to fall. Brent on March contracts has dropped to $29.6 per barrel. WTI with March delivery is on offer for no more than $29.5 on the market today. Oil quotes resumed their fall from the beginning of this week and this is continuing due to the head of the Saudi Aramco oil company, Khalid al-Falih, saying that investment in energy projects is to remain at the same level.
Amongst the other factors, it’s worth noting that there has been a fall in demand for oil from China, one of the world’s biggest consumers. Just to highlight this, the demand for diesel in China dropped 5.6% in December 2015.
We now have two different scenarios that could take place on the market. The first relies on the fact that not all investors have managed to fix their profit from the recent fall. This means that the quotes will do another U-turn from their local minimum and not update it, with a subsequent correction upwards to resume.
The second scenario is more pessimistic: if the quotes update the minimum then a further fall in the price is unavoidable.