A stronger dollar, a supply glut and warm weather depressed crude oil prices. If the warmer than normal weather conditions continue, oil prices are expected to further face downward pressure. More product and build up of crude stock might further lower the spot prices in a bid to finance the oil storage.

Lower oil prices are helping a slow adjustment in supply and demand factors. Still, the global demand growth is likely to slow to 1.26mb/d in 2017 from 1.79mb/d in 2015, particularly in North America and Asia Pacific. Supply growth is also depressed due to lower oil prices with reduction in global capital expenditure likely to be 20% in 2016.

"US crude supply will fall by 0.5mb/d next year. In addition, incremental Iranian crude supply, following the potential relaxation of international sanctions in early 2016, is likely to remain well below the government's target", says JP Morgan.

In 2016, the balance of risks is likely to be dominated by the availability of funding US shale producers and near-term uncertainties regarding the rebound in Iran's crude supply.