Oil market to struggle flooring prices

19 December 2008

The oil market is likely to have a hard time establishing a price floor until demand receives a boost, it has been claimed.

According to Jonathan Kornafel, Asia director of Hudson Capital Energy, prices could drop as far as the early 20s before traders can attempt to push them back up.

Speaking to Reuters, he added: "From a credibility standpoint, Opec has no choice but to bite the bullet for the next few months."

This comment comes just days after the oil cartel attempted to boost prices by announcing another production cut of 2.2 million barrels per day.

But it was soon apparent that its endeavours were in vain when prices continued to drop, ultimately by 20 per cent this week, reaching a four-and-a-half-year low.

While the market continues to suffer, heating oil customers are taking advantage of the prices which are now around $110 (£73) below their peak in July.

A barrel of Brent crude currently stands at $43.73 and US at $36.33 per barrel.

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