Brent futures may fall towards $30 a barrel, Citi says

Oil futures on both sides of the Atlantic might be headed lower soon, a top broker said on Tuesday.

With the oil market already saturated - and facing the imminent return of Iranian crude - the limits of on-shore storage capacity looked set to be tested in the first half of 2016, analyst Edward L.Morse at Citi said.

If on-land storage approaches the top of the tanks, Brent futures may needto fall to approximately $30 per barrel, he added.

Nevertheless, much of the oversupply in the first six months of 2016 should be absorbed by what was a still significant amount of US storage space.

Another risk facing crude markets was the potential for oil exchange-traded-funds to unwind their assets under management, which could spark another sell-off, Morse said.

West Texas Intermediate crude futures might need to fall to the high-$20s for output to be shut-in. Indeed, some local cride prices were already near the levels necessary for that t occur, the same analyst pointed out.

On a more cautionary note, the broker added: "However, oil market oversupply is not that large historically speaking, so while downside risks loom larger, upside potential cannot be ignored."