Oil Prices Fall to Six-Year Low
Japan's economy, the second biggest in Asia and No. 3 in the world shrank in the second quarter from a year earlier. The shrinking Japan economy led to drop in oil prices to near six-year lows on Monday.
The shrinking economy of Japan has added to fears that slowdowns in Asia's biggest economies will weigh on oil demand.
U. S. crude, or West Texas Intermediate (WTI), was trading 57 cents lower at $41.93 a barrel at 0211 GMT, close to more than six-year lows. Brent futures were down 65 cents at $48.54 a barrel, still far from their 2015-low of $45.19.
Data from energy services firm Baker Hughes Inc showed that the US energy firms added old rigs for a fourth straight week to the highest number since early May. This addition has shown how a period of stable prices earlier this summer stopped some firms from stepping up spending.
"The recent recovery in the oil rig count supports our expectation that U. S. producers can and will ramp up activity with WTI prices near $60 a barrel, given improved returns with costs down 30 percent", analysts at Goldman Sachs said in a note to clients.
It has been found that Citigroup Inc also lowered its crude oil price outlook citing weak market fundamentals, including an increased supply from OPEC and challenging demand growth in China and emerging markets.
The Wall Street bank lowered its base case Brent price forecasts to $54 per barrel for 2015 and $53 in 2016 from $58 and $63 respectively, said sources.
After the Obama administration approved the limited crude sales to Mexico, it is expected that oil producers in the United States will be granted an additional market outlet.