(EnergyAsia, January 7 2015, Wednesday) — Brent crude price could follow WTI to break through support at US$50 a barrel as the world oil markets is on course to make a six-year low under relentless selling pressure.

On Monday, the US benchmark hit a new multi-year low of US$49.95/barrel before settling at US$50.40 while Brent touched US$52.66 at its lowest point since May 2009 before closing at US$53.37.

Selling resumed during the Singapore trade on Tuesday, pushing WTI to a low of US$49.32 and Brent down to US$52.28.

The slide continued when New York took over, with WTI sliding to a low of US$47.84 and Brent touched $50.52.

2014 will be remembered for the 50% plunge in crude oil prices, setting the stage for further market weakness into the new year. North Sea Brent crude futures ended the year at US$57.33 a barrel for its lowest close since May 15 2009, while US WTI traded at US$53.27 a barrel, its lowest close since May 1 2009.

2014 will be remembered for the 50% plunge in crude oil prices, setting the stage for further market weakness into the new year. North Sea Brent crude futures ended the year at US$57.33 a barrel for its lowest close since May 15 2009, while US WTI traded at US$53.27 a barrel, its lowest close since May 1 2009.

Support for US$100 oil began cracking in mid-2014 after the market decided it could no longer ignore the rising glut from years of substantial — and sustained — rise in North America’s shale-based oil and gas supplies coupled with slower global energy demand growth.

For years, geopolitical turmoil in the Middle East, Africa and Asia that had threatened as well as disrupted supplies out of oil-producing areas. Those fears helped contain the build-up of bearish sentiments. But with US shale-based oil production cruising to a three-decade high of well over nine million b/d and the Organisation  of Petroleum Exporting Countries (OPEC) and Russia refusing to slash output, traders decided the oil markets had been overpriced for too long.

The sell-off picked up speed following the landmark OPEC meeting on November 27 which saw Saudi Arabia and its conservative allies dig in for a long and brutal fight for market share against North America’s shale-based producers, Russia, and the deepwater drillers. In follow-up comments with the Middle East Economic Survey (MEES), Saudi oil minister Ali al-Naimi built on oil producers’ worst fears by stating that it was “not relevant” to OPEC if the crude price fell to US$20 a barrel, and that the world may not see US$100 oil again.

The minister’s claim that a price crash to US$20 a barrel is clearly exaggerated and designed to send a stark message to competitors that the world’s leading oil exporting nation is prepared to suffer significant revenue losses to put its competitors out of business.

Giving his perspective of oil’s wild fluctuation over the last 25 years, UK consultant John Westwood said he notes one recurring theme: the lack of preparedness of nations – both producers and consumers alike – for the major changes in the availability and price of energy.

“At $21.20 on January 2, 1990, it near doubled during our first year before collapsing again to $17.75 in 1991 and the cycle has since repeated itself several times since – today’s oil price situation is not new,” he wrote.

“Dependence of importer economies on few sources of supply is often coupled with economically disastrous energy polices, Germany currently being a case in point. Likewise, in many cases the major producers have also failed to diversify their economies from almost total dependence on a single product – hydrocarbons.”

Mr Westwood, who started his firm Douglas-Westwood in 1990, is not too hopeful for prices to begin recovery from mid-2015.

“It will take some time to return to earlier levels and in the interim high cost producers will be hit. The UK North Sea for example, now requires a major tax cut for economic viability.”