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Oil prices forecast to fall further in 2016: BP chief

Saturday, 02 January 2016 2:26 PM [ Last Update: Saturday, 02 January 2016 2:27 PM ]

Oil prices are forecast to fall further in 2016.

The chief executive of Britain’s BP has warned that oil prices are set to fall to record lows in 2016.

“A low point could be in the first quarter,” Bob Dudley said on Saturday, adding that the prices are likely to stabilize towards the end of the year.

Oil prices dropped by 34% last year, mainly due to a global supply glut and China’s economic slowdown.

“Prices are going to stay lower for longer, we have said it and I think we are in this for a couple of years. For sure, there is a boom-and-bust cycle here,” Dudley said.

Oil prices started dropping further since December 4 when the Organization of the Petroleum Exporting Countries (OPEC) decided to keep its output level unchanged.

OPEC’s linchpin Saudi Arabia has said it would hold talks with fellow members in an attempt to shore up prices. Saudi Arabia has been the main opponent of OPEC production cut.

The US-based multinational investment banking firm Goldman Sachs has forecast that oil will average about $38 a barrel next month, even lower than for most of 2015.

The International Energy Agency (IEA) expects the global oversupply to persist for most of 2016, which means no relief for oil prices.

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