Oil prices likely to continue its downtrend

Oil prices continue to slide down as Brent dropped to $28 per barrel in early trade, nearing 12 -year low recorded at the beginning of the week. WTI is trading at $27.4 per barrel, its lowest level since September 2003. In the previous session the prices soared above the $30 per barrel mark before collapsing again.

The drop in oil price resumed after the bearish comments made by the International Energy Agency about the current oil market situation. A combination of unusually warm temperatures and increasing supply from Iran could mean that the oil market remains oversupplied until the end of 2016 and that prices could decline further, the IEA noted.

The IEA stated that if Iran supplies an additional 600,000 barrels per day by mid-year, with the other OPEC countries maintaining their production at the current level, it could result in an oversupply of 1.5 million barrels per day in the first half of the year. IEA has lowered its estimate for the increase in global oil demand by 100,000 to 1.7 million barrels per day in the final quarter of 2015.