Crude Oil Ends Near $46 As Analysts Lower Outlook

(RTTNews) - U.S. crude oil plunged to end at a near six-year low Monday, on continued worries of oversupply, with Goldman Sachs and Societe Generale slashing its price outlook for crude oil.

Goldman Sachs expects the oil market to "remain in a deep contango for about a year without hitting any significant storage constraints," according to the Wall Street Journal.

The analyst also revised its three-month forecast for Nymex crude to $41 a barrel, down from its prior projection of $70 a barrel. The six-month forecast was lowered to $39 a barrel, compared to a previous projection of $75. Crude oil is now projected at $65 a barrel in a year, while it was previously forecast at $80.

Meanwhile, Societe Generale also lowered its oil price projection for Nymex crude and expects prices to average $51 a barrel in the first six months of the year, due to a buildup in inventories.

The U.S. Department of Energy is scheduled to release its highly anticipated monthly oil report, which traders will be looking at closely to assess the global supply situation. Markets are currently oversupplied amid an unwillingness by major producers to limit production.

Major producers in Middle East are particularly keen on a price war that may cripple smaller rivals and push out the timeline for adopting cleaner fuels.

Light Sweet Crude Oil futures for February delivery, the most actively traded contract, dropped $2.29 or 4.7 percent to close at $46.07 a barrel on the New York Mercantile Exchange Monday.

Crude prices for February delivery scaled a high of $48.19 a barrel intraday and a low of $45.90.

On Friday, crude oil ended slightly lower on continued worries of oversupply even as the dollar weakened. However, oil prices found support with some upbeat employment data that grew more than expected, but the focus subsequently shifted to the slowdown in wage growth.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 91.96 on Monday, up from its previous close of 91.74 late Friday in North American trade. The dollar scaled a high of 92.34 intraday and a low of 91.73.

The euro trended lower against the dollar at $1.1840 on Monday, as compared to its previous close of $1.1842 late Friday in North American trade. The euro scaled a high of $1.1873 intraday and a low of $1.1787.

Markets will be paying close attention to a slew of U.S. economic data this week, including consumer sentiment and inflation reports on Friday.

In economic news, a report from the statistical offices in France and Italy, and Germany's Ifo Institute on Monday showed the euro area region set to expand moderately in the first and second quarters of 2015. Gross domestic product is forecast to grow 0.3 percent each in the first and second quarters, mainly driven by domestic demand. Investment is set to pick up moderately. It is forecast to grow 0.2 percent in the first quarter and 0.3 percent in second quarter.

Meanwhile, the Organization for Economic Cooperation and Development said the leading index signaled stable growth momentum in the region as a whole but with diverging patterns across most major economies. The composite leading index came in at 100.5 in November, up from 100.4 in October.

The indicator suggests stable growth momentum for the United States, Canada and China, while it indicated a loss of growth momentum in Germany, Italy and Russia. The index pointed to relatively lower level of momentum in France, Brazil and in the euro area as a whole.

Elsewhere in Asia, Japan raised the economic growth estimates marginally for fiscal year 2015. The real economic growth is estimated to reach 1.5 percent compared to the prior forecast of 1.4 percent, the Cabinet Office said Monday.