Oil prices under pressure amid weaker demand outlook
By Money Times
Oct 27, 2015 03:27 AM EDT
Oct 27, 2015 03:27 AM EDT
Crude oil prices continued to trade in low range amid sagging demand and its bleak outlook for remaining part of 2015. Speculators are withdrawing from their previous bets on rising prices. The front-month US crude futures were trading at $44.65 per barrel 12 percent lower than the peak level in October. ANZ Bank forecasts that oil price to remain under pressure for the rest of the year.
The oversupply situation in the global oil market is also putting further pressure on oil prices. The stock build of 0.6million barrels per day was recorded during the third quarter. The build-up of inventories coupled with mild winter for Europe and the US will further reduce the production levels.
According to research agency Energy Aspects, the quarterly outlook indicates the sharp slowdown in global demand for oil at 0.8million barrels per day for the fourth quarter. This will also indicate the most sluggish quarter during the past five quarters.
ANZ bank said in its report that "speculators are cutting bets on rising oil prices. Net speculative (US) long positions are declined by 13,841 contracts for the week ending 20 October. We remain cautious on commodity prices into year-end given weak demand conditions."
The likely occurrence of El Nino may lead to further lower production at refineries. This will result in low intake of crude oil by refineries. The clueless traders are looking for some concrete triggers to determine on the next level of markets. The traders are awaiting German business climate for October. The US is also poised to announce new home sales figures for September shortly.
Oil futures dropped six percent the for the last week and this was mainly due to the strengthening of the US dollar. Natural gas futures shed 3.59 percent at $2.286 per million British thermal units (mBtu) indicating the worst close since 2012.
December West Texas Intermediate (WTI)crude eased 78 cents or 1.7 percent to close the week at $44.60 a barrel on New York Mercantile Exchange. December Brent crude dropped 0.19 percent on London's ICE Futures exchange.
In the wake of low oil prices, the investment in the oil and gas sector is likely to decline further. The investment in the oil segment already witnessed a drop of one-fifth this year so far, according the International Energy Agency (IEA). If the drop in oil investment continues for one more year, then it'll be first time in the last two decades that oil investment eased for the consecutive two years.
© 2023 VCPOST, All rights reserved. Do not reproduce without permission.