The Dow Jones Industrial Average slipped 117.11 points, or 0.7%, to 17603.87. The S&P 500 fell 0.7% and the Nasdaq Composite lost 0.8%.
“The 800-lb. gorilla in the room, and by that I mean Saudi Arabia, showed it’s power,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “They are on a mission to squeeze out the high-priced producers and aren’t done yet. Things could get very ugly in the second and third quarters for countries like Venezuela and Nigeria and for U.S. exploration companies.”
In July 2014, at the height of the Crimean Crisis, Ukraine imported gas from Western Europe, and particularly from Germany for $370 per 1,000 cubic metres. Earlier in the 2014, the country had paid $273 per million cubic metres for gas from Russia.
The immediate outlook for oil prices remains bleak, with some analysts like Goldman Sachs saying prices as low as $20 per barrel might be necessary to push enough production out of business and allow a rebalancing of the market.
The latest Reuters survey of 31 analysts showed an average price forecast for Brent for next year at $57.95 a barrel, more than $20 above current prompt market values.
"Our estimate for next year is around $40 per barrel when estimating budget revenues. At $40 per barrel there is an understanding about how to act. Measures and proposals have been prepared."
Mr. Novak said that the project could still be implemented if the European Commission develops corresponding infrastructure for natural gas transportation in Central and Eastern Europe.
“We see the market balancing some time in 2016. We see demand ultimately exceeding supply...Prices in due course will respond,” he said.
For oil and gas producers, 2016 will be a year of cost-cutting, restructuring, refinancing when it is possible, and in some cases bankruptcy when it is not. Merger and acquisition activity, which was sluggish this year because of disagreements over valuations, may pick up speed.
CNPC said the entire pipeline project is expected to be completed and operational by the end of 2018. Construction of the Chinese section began in June 2015, while construction of the Russian section began in September 2014.