Oil Traders Expect Low Prices to Stick

The collapse of the global oil market over the past six months appears likely to keep petroleum prices low unless the dramatic drop triggers an equally sharp rebound, The Wall Street Journal reports.

Analysts say oil prices could fall to an average $46 per barrel this year, less than half the price last June. But traders who have bet on falling prices are becoming nervous about what they see as an increasingly volatile market.

Analysts estimate the global oil market is oversupplied by 1 million-2.5 million barrels per day, according to the Journal. It says producers have been reluctant to cut back, fearing they will lose market share to others who don't.

Meanwhile, oil and fuel supplies reached record highs in the U.S. at the beginning of the year. Excess crude may be turning into oversupplies of refined products because demand isn't growing fast enough to keep up.

Some traders and analysts expect oil prices to rally temporarily. But the Journal says few expect a sustained rebound. The newspaper notes that the Organization of the Petroleum Exporting Countries, which decided in November to maintain production, isn't schedule to meet again until June.