After U.S. crude prices broke below $30 per barrel for the first time in 15 years, the market is asking how low oil futures can go? Most analyses see it rebounding in the back half of 2016, but crude faces significant headwinds in the coming months, experts told CNBC.
On Monday, Morgan Stanley joined Goldman Sachs in saying oil prices could dip to $20, and a number of major banks cut their crude cost outlook this week. Standard Chartered even raised the specter of $10 oil.
Oil as low as $20 — and perhaps even lower — is indeed possible, said Matt Smith, ClipperData's director of commodity research.
"It seemed outlandish that we would get down to this level, but by all means, we could drop another $5-10 here," he told CNBC's "Squawk Box" on Wednesday. "Now we've tested the two-handle here and the weakness is really going to come over the next sort of three, six months as the market looks to rebalance."
Global oil production has so far remained stubbornly high despite a roughly 70 percent collapse in crude prices since mid-2014.
U.S. output in particular has weathered an OPEC policy engineered by Saudi Arabia to preserve market share and pressure higher-cost production. American drillers maintained output above 9 million barrels per day throughout 2015, according to the latest available figures from the U.S. Energy Information Administration.