PUBLISHED: 1 hour 44 MINUTES AGO | UPDATE: 0 hour 0 MINUTES AGO
The collapse in the oil price to a five-year low may have run its course and the cost of oil has probably bottomed, Citigroup says.
The assessment came as the New York Federal Reserve said cheaper energy prices were good for the US economy and other net importers of oil.
The crude oil price on Monday touched its lowest level since mid 2009.
Brent crude oil plunged as much as $US2.62 to $US67.53 a barrel, while the price of West Texas Intermediate crude fell $US2.43 to $US63.72. Both later rebounded from their lows.
Analysis by Citi technical analyst Tom Fitzpatrick said the speed of the move down in the oil price and the levels reached “suggest to us that this move may have finally run its course” for the near term and possibly the medium term.
The analysis is based on historical comparisons to oil price routs in 1998, 2008 and 2010.
Crude oil has fallen about 40 per cent since mid June. Some analysts have said the oil price slide could continue, forcing the price to as low as $US40 a barrel.
A supply glut and weakening demand from China and Europe are chiefly responsible for the shock plunge in the price of oil in recent months.
SXY Price at posting:
29.0¢ Sentiment: None Disclosure: Held
