Oil prices hit on Tuesday their lowest levels since mid-November last year, with WTI entering a bear market, and analysts now see the price of oil sliding further down to below US$40 and even into the US$30s, as rising output from Libya and Nigeria adds to the persistent concerns over global oversupply.

As of 2:21pm EDT, WTI Crude had tumbled 3.11 percent to US$43.05, while Brent Crude had plunged 2.79 percent at US$45.60.

According to analysts, the slide will continue, and oil prices could drop to levels they hadn’t seen in more than a year.

“Oil is in a downtrend and risks trending into the $30's,” Paul Ciana, a technical strategist at Bank of America Merrill Lynch, said in a note on Tuesday, as quoted by Business Insider.

Oil prices have now dropped to the levels they traded before OPEC and 11 non-OPEC producers agreed to a production cut deal in an effort to kill the glut and push prices up. The nine-month extension to the deal, until March 2018, failed to lift oil prices, with analysts and traders questioning if OPEC’s cuts have had or would have an effect on global supply, given the U.S. shale resurgence, rising output from other producers that are not part of the deal, and increased production within OPEC, where exempt Libya and Nigeria, and non-complying Iraq, have recently increased output.

Like BofA, Fereidun Fesharaki, chairman of oil and gas consultancy FGE, on Monday said that oil prices could plunge to US$30 a barrel in 2018 and maintain that low price for some two years, if OPEC fails to make steeper output cuts.

Oil prices are “most definitely” heading to US$40 and are likely to slip into the upper US$30s, John Kilduff, founding partner at energy hedge fund Again Capital, told CNBC’s Squawk Box on Tuesday.

“The future might be bright for oil prices but the present is not,” Tamas Varga with London-based broker PVM told FT. Any immediate price gain would be “wishful thinking”, according to the analyst.

By Tsvetana Paraskova for Oilprice.com

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