Oil price to fall until major Asian manufacturers feel the benefit

Wed Jan 7, 2015 4:25am EST
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* Oil prices have halved on supply glut/weak demand

* Asia's major economies see slowdown

* Strong US dollar also drags on oil market

* But cheap energy will eventually spur growth, energy demand

By Henning Gloystein

SINGAPORE, Jan 7 (Reuters) - Oil prices will continue to drop as high production meets weak demand and a strong U.S. dollar pressures crude, and markets will only pick up once major manufacturing economies particularly in Asia feel the benefit of cheaper energy.

Oil prices have halved since last June to near 6-year lows as economic growth stutters, and analysts say that a building supply glut means prices are set to fall further before any rebound.

On the supply side, downward pressure on oil has come from a boom in U.S. shale oil output and, more recently, by the Organization of the Petroleum Exporting Countries' (OPEC) decision not to cut output in support of prices, and instead try to defend market share against North American shale by offering discounts.

"The risks to oil prices remain skewed to the downside in the near term," ANZ Bank said on Wednesday.   Continued...