A relief for crude oil price woes looks elusive in the coming quarters even as the prices fall by nearly 70% since June 2014. While a decent demand supported oil prices from falling further in the past few months, despite supply glut, a slowdown in major economies has now become a big cause of concern for the oil markets.
Until recently, oil prices have come under pressure due to oversupply issues, as oil producing countries shelved the idea of cutting output to shore up prices. Saudi Arabia, the world's largest oil producer, has been vehemently opposing the proposal of reducing the production on concerns over losing its market share to other producers.
But now, oil prices seems to be facing demand side worries, as the major oil consuming countries show signs of slowdown.
Oil product demand growth in Europe contracted for the first time in 10 months in October, while diesel and gasoline demand growth in China, one of the world's largest consumers of oil, showed a decline, according to Oil analysts JBC Energy.
"The demand situation does not support a return to a higher price environment," Reuters quoted derivatives exchange operator CME Group as saying.
"China is still decelerating. Growth in emerging markets is slow. Europe may grow 1 percent to 2 percent in real GDP terms, the U.S. a little better, and Japan a little less. No major demand surges here."
Overall, crude oil prices have seen nearly 70% decline since last year, falling from highs of over $100 a barrel as the Organization of the Petroleum Exporting Countries (OPEC), which produces 31.7 million barrels a day, decided not to cut output to defend market share.
The oversupply situation is expected to get worse once oil exports from Iran hit the global market, as the sanctions over its nuclear programme have been eased by the Western countries.
In its recent report, global brokerage Goldman Sachs predicted that oil prices will fall to as low as $20 a barrel in coming months.
The benchmark Brent crude prices traded above $36 per barrel on Monday, staying close to 11-year lows hit earlier in December.