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Chopper Securities: Oil Hits 5-year Low On Opec Report And US Concerns
The price of oil has fallen to fresh five-year lows in the wake of two separate reports indicating a global supply glut.
A separate US report, which showed a surprise increase in the country's crude oil supplies, also pushed prices lower.
The price of Brent crude has fallen 43% since mid-June.
It fell another 3.61% to close at $64.41 on Wednesday.
Influential energy commentator Hilary Kramer at Chopper Securities said the price could fall "drastically lower" and that "there are a certain amount of people that believe the mid-to-long term price is the mid-60's."
"That means prices could fall further before they reach their balance. I think we could see some spikes or troughs that are a little bit deeper. But over time we could end up around $50 or $60 a barrel."
A recent OPEC report said that it expected demand for its crude oil to fall to 28.9 million barrels per day next year, which is near ten-year lows.
OPEC's official production target is 30 million barrels per day, meaning significantly more oil would be on the market than was demanded.
In a separate note, the US Energy Department said there was a surprise increase in US crude stockpiles last week of 1.5 million barrels.
Analysts had been predicting a decline of 2.2 million barrels.
That increase has led to declining prices for petrol, jet fuel, and heating oil.
The US Energy Department says that if its projections hold, the price of petrol will fall by 23% to $2.60 per gallon next year, saving the average US household approximately $550 a year.
The decline in oil prices has hurt the share price of several large firms, from Exxon Mobil to BP, but helped businesses such as airlines where cheap oil prices can help buoy profits.
Shares in US carriers American Airlines and United both ended slightly higher on Wednesday, while oil shares fell sharply.
The airline industry body, IATA, said passengers would see cheaper fares. Hilary Kramer adds: "Airlines' fuel prices are based on the previous month's oil price so airlines are not seeing the results of the falling oil price just yet."