$30 Oil? It's Possible

The price of oil appears to have stabilized just north of $50 per barrel, but some analysts are calling for a 40 percent plunge.

Bloomberg: Possibility Of Falling Prices

According to a Bloomberg report, crude prices could fall to $30 per barrel if the Organization for Petroleum Exporting Countries (OPEC) expands a production cut that was announced in late 2016. As part of the OPEC agreement, members will collectively cut their supply of oil by 1.2 million barrels of barrels per day. Russia, a non-OPEC member, also offered to partake, which brought the total supply cut to 1.8 million barrels per day.

The problem is that the agreement to slash supply will expire at the end of the first half of 2017 so the catalyst, which helped support oil prices could disappear in the bottom half of the year.

The Backdrop

Meanwhile, America's energy production is rising, partly due to expectations of President Donald Trump's pro-energy friendly agenda. Specifically, the Energy Information Administration (EIA) the United States added almost 500,000 barrels a day of production since October.

Related Link: America's Oil Production Could Surpass Those Of 4 OPEC Producers In 2017

Hans van Cleef, ABN Amro's senior energy economist, told Bloomberg that the removal of the price support could push oil back to where it was two years ago, namely the low $30 level.

"We don't see any upside from OPEC anymore," the economist added in the interview. "What we do see is more risk of higher production in the U.S., we see a rise in inventories."