MARKET WATCH: Brent crude oil hovers under $29/bbl

The March contract for Brent crude oil on London’s ICE exchange dropped 39¢ to settle at $28.55/bbl on Jan. 18 after having dipped to a trading session low of $27.67/bbl. Analysts said the day’s low was Brent’s lowest price in nearly 13 years.

JPMorgan Chase lowered its oil price forecasts, saying it now expects Brent crude oil will average $25/bbl during the second quarter and $31.50/bbl for the year. The revision was down from a previous forecast that Brent would average $51.50/bbl for 2016.

US commodities futures trading was closed Jan. 18 on the New York Mercantile Exchange in observance of the Martin Luther King Jr. holiday.

Separately, Chinese President Xi Jinping was scheduled Jan. 19 to start a trip to the Middle East, with stops planned in Saudi Arabia, Egypt, and Iran.

Analysts said China is working to better link its own economy with the rest of Asia, Africa, the Middle East, and Europe. Recent turmoil on Chinese stock markets and sluggish manufacturing statistics concerns some investors and analysts about China’s future oil demand.

The Organization of Petroleum Exporting Countries released its monthly Oil Market Report on Jan. 18, saying it expects the world oil market will begin to rebalance later this year.

“After 7 straight years of phenomenal non-OPEC supply growth, often greater than 2 million b/d, 2016 is set to see output decline,” OPEC said.

The cartel estimated its members’ combined production at 32.2 million b/d in December, which remains above OPEC’s estimated 31.6 million b/d in demand for OPEC oil for 2016.

The average price for OPEC’s basket of 12 benchmark crudes on Jan. 18 was $23.58/bbl, down $1.16.

Contact Paula Dittrick at paulad@ogjonline.com.

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