US crude oil prices approach 20% fall since beginning of the yr

US crude prices continued a relentless dive early on Tuesday approaching a 20 percent drop since the beginning of the year as analysts scrambled to cut their 2016 oil price forecasts and traders bet on further price falls.

US crude West Texas Intermediate (WTI) CLc1 were trading at USD 31.34 per barrel at 0805 GMT on Tuesday, down 7 cents from their last settlement and almost 19 percent lower than at the beginning of the year. WTI has shed over 70 percent in value since the downturn began in mid-2014.

Trading data showed that managed short positions in WTI crude contracts, which would profit from a further fall in prices, are at a record high, implying that many traders expect further falls.

Analysts also adjusted to the early price rout in the year, with Barclays, Macquarie, Bank of America Merrill Lynch, Standard Chartered and Societe Generale all cut their 2016 oil price forecasts on Monday.

"A marked deterioration in oil market fundamentals in early 2016 has persuaded us to make some large downward adjustments to our oil price forecasts for 2016," Barclays bank said.

"We now expect Brent and WTI to both average USD 37/barrel in 2016, down from our previous forecasts of USD 60 and USD 56, respectively," it added.

But it was Standard Chartered that took the most bearish view, stating that prices could drop as low as USD 10 a barrel.

"Given that no fundamental relationship is currently driving the oil market towards any equilibrium, prices are being moved almost entirely by financial flows caused by fluctuations in other asset prices, including the USD and equity markets," the bank said.

"We think prices could fall as low as USD 10/bbl before most of the money managers in the market conceded that matters had gone too far," it added.