Crude oil could plunge to $20/bbl: Citi report

The recent surge in crude oil prices is just a "head-fake," and oil as cheap as $20 a barrel may soon be on the way, Citigroup said in a report, as it lowered its forecast for crude oil. Despite global declines in spending that have driven up crude oil prices in recent weeks, oil production in the US is still rising, wrote Edward Morse, Citigroup's global head of commodity research. Brazil and Russia are pumping oil at record levels, and Saudi Arabia, Iraq and Iran have been fighting to maintain their market share by cutting prices to Asia. The market is oversupplied, and storage tanks are topping out. A pullback in production isn't likely until the third quarter, Morse said. In the meantime, West Texas Intermediate Crude, which currently trades at around $52 a barrel, could fall to the $20 range "for a while," according to the report.

The US shale-oil revolution has broken OPEC's ability to manipulate prices and maximise profits for oil-producing countries.