Oil Prices Seen Declining Despite Rays Of Hope From US

Data from the United States helped give oil prices a minor boost on Thursday, but the gains didn't last long as the commodity appeared to be heading for a weekly loss on Friday morning.

Crude prices have been on a downward spiral this year as concerns about the growing supply glut and an economic slowdown in China weigh on investors. Now, despite what seemed to be promising signs from the US, many still foresee a dim future in the coming year.

U.S. Production Cuts

Data from the Energy Information Administration out on Thursday showed that U.S. production fell to 9.1 million barrels per day, an 83,000 barrel per day decline. On Wednesday, the EIA also confirmed that U.S. oil output had fallen to an 11-month low in August and that the Agency expects to see further declines in the coming year. The figures suggest that U.S. producers are finally being forced to cut back as lower prices and falling demand squeeze their operations.

Related Link: Crude Oil Rallies Despite Weak Fundamentals

Forecast Lowered

However, the gains from Thursday's report were short-lived as forecasts for crude's future remained gloomy around the globe.

The Organization of the Petroleum Exporting Countries announced that they aren't expecting to see prices rise much higher this year, and Goldman Sachs cut its forecast for the commodity. The firm said it expects WTI prices to remain near $48 per barrel through the remainder of the year, and lowered its 2016 WTI price forecast to $45 per barrel from $57 per barrel.

What Does It Mean For Investors?

Oil prices are unlikely to make a significant recovery any time soon. Investors are being cautious when it comes to commodity investments as uncertainty about the global economy and worries about demand are likely to continue weighing on prices in the coming year. Most expect that further production cuts are needed before the market can begin to stabilize.