WTI Crude had another major fall on Thursday, January 15, with prices dropping to $46.22/barrel, down 4.66 percent from Wednesday’s close. Daniel Yergin, co-founder and chairman of Cambridge Energy Research Associates, was on CNBC recently to discuss how it’s not just the supply, but also demand causing oil prices to slump.
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Is Oil Close To A Bottom Here?
“No, not necessarily”, Yergin said. “I think that there still is downward pressure that’s there and the kind of the thing that’s hovering over and has affected things today is the continuing concerns about economic prospects.”
“Today was the U.S., because part of the whole recipe here for what the Arab Gulf producers are doing is to stimulate demand, but you have a weak global economy. I just was in China twice in the last couple of weeks and you can feel the weakness there as well.”
Where Is The Demand?
Yergin continued, “If you look around and you say where will demand increase, you look at
India,
Indonesia, now
Mexico; they are all moving to eliminate subsidies on oil, which would raise the price in their countries.
Europe is supplied on its back;
Chinese demand is weaker; and when I was over in
Japan talking with people in our office there.”
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“Chinese oil demand is so linked to construction and infrastructure and that’s weakening. So, the one place you could see demand spike up a little bit is in fact in United States,” Yergin concluded.
“Because when you pull into a gas station, you basically see the price of oil. You put at a gas station in Europe, you see taxation.”
