Crude Oil Prices Falling, Seen Lower Into Year’s End
$OIL, $USO
Crude Oil prices weak in Asia Monday, as a slowing demand outlook implies the oversupply will remain in place for months, prompting speculators to cut their bets on rising prices.
Front-month US Crude Oil futures were trading at 44.78 bbl at 00.55 ET, 18 cents above their last close but more than 12% lower than their October highs.
International benchmark Brent was 13 cents higher at 48.12 bbl but more than 11 percent below October’s high
Analyst’s expected prices to remain low for the remainder of this year and that speculators were cutting their bets on higher prices. Net speculative US long positions declined by 13,841 contracts for the week ending 20 October.
On the demand side
Research agency Energy Aspects said in its Quarterly outlook that it “forecast a sharp slowdown in global Oil demand across Q-4 of Y 2015 at 0.8-M BPD, which marks the slowest pace of growth in 5 Quarters.
The research shows that the ongoing oversupply in Crude Oil was starting to come into the market for refined products, with a product stock-build of 0.6-M BPD seen in Q-3.
Rising inventories as well as a mild Winter expected for Europe and North America as a result of El Nino would likely lead to reduced refinery production and lower use of Crude Oil by refiners, the report said.
Due to the low prices, investment in the sector in Y 2016 will likely decline further after sliding this year by more than 20%, the executive director of the International Energy Agency (IEA), said Monday.
“If it comes true, this will be the first time in two decades we will see oil investments declining for 2 consecutive years and may be an indication for future Crud Oil markets,” he said at the Singapore International Energy Week.
Swift Worldwide Resources estimates that more than 200,000 jobs in the Oil & Gas industry have been cut worldwide since prices collapsed last year.
Have a terrific week.
HeffX-LTN
Paul Ebeling
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