Holly Ellyatt  @HollyEllyatt

Oil: Unclear whether we've reached the bottom

The oil price drop has not hit the floor yet. Neil Atkinson, head of analysis at Lloyd's List Intelligence explains that the impact of lower oil prices will restrict the growth of production, and encourage a faster rate of demand growth.

Last year was a tumultuous year for oil, with Brent crude prices declining around 50 percent since June on the back of an over-supplied market and lack of global demand.

From "old school" oil producers Russia and Saudi Arabia in the east to shale oil in California and oil sands in Alberta in the west, the glut of oil and its impact on currencies and economies has been felt across the world.

When the Organization of Petroleum-Exporting Countries (OPEC) decided not to cut production when it met in November, the 12 major oil producers effectively threw down the gauntlet to the young guns of U.S. oil to see who could withstand the fall in prices and who would blink first and trim production.

On Jan. 2, benchmark Brent crude was trading at $57.11, having fallen from a high of around $115 a barrel hit in mid-June.

With prices falling fast and hitting five-year lows in mid-December, commodities research teams at the world's investment houses and banks scrambled to revise their 2015 predictions for oil and the potential impact on global economies.

And as wildly fluctuating as the price of oil has been, so have the predictions. While HSBC told investors to prepare for $95 a barrel by the end of 2015, other analysts were far more bearish. Morgan Stanley cut its 2015 forecast for Brent saying that in a worst case scenario crude prices could fall to $43 per barrel in 2015, although its base case scenario was for $70.

The 'Made in America' market

The U.S. shale revolution and its accompanying rise in oil production has been a decisive factor in the fall in the price this year.

The newcomer has affronted the old guard of producers like Saudi Arabia, the biggest oil exporter in the OPEC group and analysts believed its decision not to cut production was a move to put price pressure on U.S. producers.

Read More › Oil falls as OPECopts not to cut production

The U.S. might not give up so easily though, according to Citi's commodities research team who said in their 2015 outlook for the commodities markets that there is a "distinctive underlying 'Made in America' quality that looks likely to dominate the commodity complex through 2015."

Whether U.S. shale oil producers can withstand the fall in prices into 2015 and dent OPEC's market share is a key matter for debate, however.

"Prices are already approaching the danger point for the bulk of U.S. shale output, so industry costs would have to fall for prices to be sustainable at these lower levels," Melanie Debono, economist at Capital Economics, said in the consultancy's accompanying note.

Read More › OPEC needs to 'wake up' to shale revolution

There was a risk, Debono added, that an extended period of lower oil prices would lead to large cuts in output in both the U.S. and Canada. Companies like ConocoPhillips who are active in the U.S. shale industry have already announced that it would "defer significant investment" in Canada and the U.S. as returns looked far less attractive.

"It's very clear if oil prices remain below in the region of $64 per barrel for a sustained period of time—that's about a three to six month period at least—we would start seeing increased scale backs in the U.S.," Abhishek Deshpande, oil and gas analyst at Natixis. "But the impact on that on production would only be start to felt in 2016 onwards and not as much as we would like to see in 2015."

What will OPEC do?

If the oil price continues to fall, global markets are sure to turn again to closely watch the next move from OPEC, which produces about 40 percent of the world's crude oil, according to the U.S.'s Energy Information Administration.

While countries like Saudi Arabia could potentially cope with lower oil prices for around a year, weaker OPEC members like Venezuela are on the brink of economic collapse. Despite watching its fellow members flounder, Natixis' Abhishek Deshpande forecast that Saudi Arabia was "in no hurry" to cut production and would hold out as long as it takes to retain market share.

"Saudi Arabia will hold out on low oil prices for two reasons," he told CNBC, "both in order to instill output discipline on other OPEC members and to inflict collateral damage on marginal, unconventional producers" such as those in the U.S.

As such, markets would remain oversupplied in 2015 according to Deshpande. "We do see that in the first and second quarters of 2015, which are seasonally low in demand, we could see more pressure coming on Brent if there are absolutely no scale backs from the OPEC side."

As for the future of OPEC itself, the latest meeting of the group had shown strained relations between the members, with some able to withstand lower prices and others like Iran, Ecuador and Venezuela desperate for a cut to stem the price fall. Keeping the so-called oil cartel together could be a decisive factor if Saudi Arabia agrees to a cut.

"The cracks are already showing in OPEC," Deshpande said. "Sooner or later, they'll have no choice (but to cut) otherwise OPEC as a cartel will break apart."

Holly Ellyatt

Assistant Producer, CNBC.com

www.cnbc.com/