By Aminu Imam with agency report
Oil prices on Tuesday dropped to nearly a six-year low, with the prices of both Brent and US crude converging briefly at a point, as Saudi Arabia and its Gulf allies in the Organisation of Petroleum Exporting Countries (OPEC) insist on their refusal to cut production to boost prices.
As OPEC battles not to lose its Asian market share, the glut in the market forced the price of Brent down by $1.56 at $45.87 a barrel after a session low at $45.19, its lowest since April 2009.
Similarly, the United States crude, West Texas Intermediate (WTI) was down to an April 2009 low of $44.20 earlier in the session before pulling back to trade down about 40 cents at $45.67 a barrel..
The arbitrage between US crude and Brent crude oil futures traded at parity for the first time since October 2014, with both markets at $46 a barrel at one point.
It was not immediately clear why the benchmarks converged, but Reuters quoted analysts as saying it was a combination of oversupplied global markets coupled with short covering on the US crude contract.
With the rising glut in the market, both contracts are on track to settle at fresh near-six-year lows.
The Wall Street Journal reported that Goldman Sachs and Société Générale had also sharply lowered their oil-price forecasts in their latest reports.
The revisions come on the heels of last week’s lower forecasts from Citigroup Inc., BNP Paribas SA and Commerzbank AG.
Goldman Sachs, one of the most influential US banks in commodities markets, said that it had cut its 2015 forecast for Brent to $50.40 a barrel from $83.75 and reduced its 2015 WTI price forecast to $47.15 per barrel from $73.75.