CRUDE oil prices fell to their lowest level in past four years due to concerns about falling demand with economic slowdown and rising inventories. Analysts, however, said that correction in oil prices may not have finished as yet — and prices could further fall in coming few days. The irony is that despite the Opec announcing a significant cut in production, the pessimism among market participants continues to drive the prices down.

An Angel Commodities report says that a supply cut by Opec is not likely to support oil prices in the short term, as current macroeconomic data is showing bleak economic outlook. “We believe that crude oil futures in the short term are likely to fall up to $30 per barrel levels. Oil prices can trade in the range of $32 and $48 a barrel,” the report adds.

Subodh Gupta from Anand Rathi Commodities is expecting a lacklustre movement as most of the market will be in holiday mood. “Overall $30 should act as a good support for crude oil in coming days,” he said.

Earlier, Opec announced to cut down the production by 2.2 million barrels per day with effect from January but this was offset by the piling inventories and low demand. Having failed to arrest the fall in prices, Opec members may meet again later in January to discuss further reductions.
Even the US Federal Reserve brought the interest rates down to 0% to turn back a deepening recession. Central banks across the globe are slashing rates and eyeing policy measures as the global financial crisis sends many rich countries into recession and slows growth in China and India.