Oil prices were unlikely to break the $45 a barrel in the short-term future even if the US dollar continued to decline, analysts at Morgan Stanley said.

Both crude benchmarks slipped back on Monday (14 March), with West Texas Intermediate losing 0.92% to $38.15 (£31.35) a barrel as of 7.27am GMT, while Brent crude was down 0.50% to $40.19 a barrel. The decline came aid fresh concerns over a global slowdown and global oversupply, which offset the prospect of declining production in the US, where oil drilling rig count fell for a 12th straight week last week to a total of 386, its lowest since December 2009 as oil firms seek to cut costs.

According to Morgan Stanley, traders were selling oil future to hedge forward production and storage, which is likely to put prices under pressure.

Prices "will struggle to break $45 in the front, even if the US dollar continues to pullback," analysts at the investment bank said in a note. Morgan Stanley added that while crude prices had likely bottomed out, the current economic environment would prevent a sharp rises in oil prices for the foreseeable future.

"Oil prices now seem to have bottomed, even though they are likely to stay subdued for the rest of this year before starting to move higher in 2017," the US bank said.

"When oil prices are falling below production costs, the income gains for consumers will be smaller than the costs to producers and falling oil prices become a negative-sum game."

However, the decline in oil prices has not boosted growth in the way analysts hoped and Morgan Stanley warned the risk of a global recession in 2016 stood at 30%, adding it was "no longer looking for an acceleration in 2016 GDP growth".

Oil prices fell by a quarter in the first two months of 2016, bringing their decline over the past 18 months to 70%, but have regained some ground between February and March, leaving analysts in disagreement over what is in store for the market.

Analysts at Goldman Sachs warned the ongoing oversupply, which currently sees one million barrels of oil per day (bpd) produced in excess of the demand, will drag prices down again over the next few months.

The International Energy Agency however was more optimistic and said on 11 March that oil prices had bottomed out on the back of output cuts outside the Organization of Petroleum Exporting Countries and a weak US dollar.

Meanwhile, official figures released on 12 March showed demand in China, one of the core markets for oil traders, remained strong since the turn of the year. Refinery throughput in the world's second largest economy rose 4.6% year-on-year over January and February to 10.59m bpd, while the country posted record imports of 8m bpd in February.