Oil: A return to $40-$42 cannot be ruled out  - BBH

Analysts from Brown Brother Harriman, points out that oil supply remains resilient and consider that an extension of the decline in prices is likely. 

Key Quotes: 

"Oil prices are lower for the seventh consecutive session. Light sweet crude prices had fallen 10.3% over the past two weeks, and with today's losses are off another 1.6% already this week.  There are two main considerations.  The imbalance between supply and demand has not adjusted as much as expected, and the market positioning is extremely long, with many bank analysts still nursing bullish forecasts.”

“The April light sweet contract is trading at its lowest level since the end of last November.  At $47.20 would have retraced 61.8% of the rally since shortly after the US election.  Below there the risk extends to $45-$46.  Over, the slightly longer term, a return toward $40-$42 cannot be ruled out.”

“OPEC's cuts, if fully implemented would have brought the cartel's output back to where it was in early 2016.  There were several members exempt from output cuts, and they seem to take full advantage of their allowances, if not more so.  It is offset the loss of around 13% (~100k barrels of Libyan output due to conflict.  At the same time, non-OPEC producers, including the US, Canada, Brazil, the North Sea and Russia have increased output by around one million barrels, according to reports.”
  
“US crude inventories are at record levels.  This not only reflects the increased US output, which is the highest in more than a year but also increased imports.”