Oil prices will drop until producers scale back

Oil prices will continue to drop as high production meets weak demand and a strong 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 six-year lows as economic growth stutters, and analysts say 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 US shale oil output and, more recently, by Opec’s decision not to cut output in support of prices, and instead try to defend market share against north American shale by offering discounts.