HOUSTON — U.S. crude fell to a new six-year low Monday after Japan said its economy contracted in the second quarter and more signs emerged that the global oil glut isn’t going away quickly.

Markets were also reacting to news that North Dakota state regulators estimated oil production in the state rose slightly in June compared to the previous month, another sign that U.S. shale production is more resilient than previously anticipated, said Andy Lipow, president of Lipow Oil Associates in Houston.

“We’re going to see oil prices with a $3-handle on it … in the next few months,” Lipow said.

The U.S. benchmark oil price fell 63 cents to $41.87 a barrel on the New York Mercantile Exchange, its lowest settlement since March 9, 2009.

Lipow’s prediction is one many analysts had made in the earlier this year in February and March, before U.S. crude went back up to around $60 a barrel. But it’s looking more likely now because the seasonal peak in oil demand is set to end next month and refineries are slated to start a period of repairs this fall.

But it could get even worse in the first quarter, if the nation’s crude stocks reach more than 5 million barrels. There’s typically a build in crude stocks in first few months of the year, and the market isn’t going to like it if the nation’s stockpile grows to more than 5 million barrels, Lipow said.

“I think oil prices are going to remain under pressure for the next 18 months, through the end of 2016,” he said. “It’s going to take a significant amount of time for growing demand to soak up the excess supply. And the market is concerned about Iranian oil.”

The North Dakota Pipeline Authority said recently the state’s daily oil production in June reached 1.21 million barrels, up from 1.2 million barrels in May. Japan, the world’s third-biggest consumer of crude, said its gross domestic product slipped 1.6 percent in the second quarter, according to Japan’s Cabinet Office.

Japan said its exports of goods and services declined 16.4 percent and its private demand fell 1.7 percent.

Sourced from fuelfix.com August 18th, 2015.