The recent falls in commodities prices have dramatically soured market sentiment. Oil prices continued their rout on Monday after closing the previous session at their lowest levels since March on renewed oversupply concerns from the United States and Iraq. A weaker U.S. dollar however helped to limit deeper losses.The expectation of continued abundant oil supplies, including an output increase from Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries, led the National Australia Bank on Monday to revise its oil price forecasts in a monthly report.There is little to suggest that the price slide has come to an end. Massive losses on the Chinese equity markets are likely to compound the concerns about a weakening of Chinese oil demand that had emerged on Friday. The Shanghai Composite was down 8.5%, its sharpest daily fall since 2007. Investors are looking to the U.S. Federal Reserve for direction this week. The central bank starts a two-day policy meeting on Tuesday that could result in a September interest rate hike that would strengthen the greenback.“The markets are looking for price guidance from Janet & Co,” said Ben Le Brun, market analyst at Sydney’s Options Xpress, referring to Fed Chair Janet Yellen and the bank. “There is scope for the dollar bulls to be disappointed this week (which) might be a driver for oil prices and the commodities complex overall,” Le Brun said.Sparking new worries about a global glut, U.S. oil producers added 21 drilling rigs last week, the biggest rise since April 2014, according to Baker Hughes. The increase in drilling activity came despite a 21 percent collapse in U.S. crude prices from about $61 a barrel in mid-June. A 20 percent downturn is considered by many traders to constitute a bear market.In Iraq, exports from its southern oilfields are on course for a monthly record, having topped 3 million barrels per day so far this month, according to loading data and an industry source. Brent crude for September was down 2 cents at $54.60 a barrel as of 0655 GMT after dropping 65 cents in the previous session to $54.62, its lowest close since March 19. U.S. crude for September was down 12 cents at $48.02, after falling 31 cents in the previous session to $48.14, its lowest settlement since March 31. It hit an intra-day low of $47.72 on Friday, the lowest intraday price since April 1.“We now expect oil prices to stay below $70 a barrel for the rest of 2015 and 2016,” National Australia Bank said. According to the CFTC, the week to 21 July saw net long positions reduced by a considerable 33,200 to 114,200 contracts, putting them at their lowest level since December 2012. Net long positions in WTI have been slashed by more than half in the space of just four weeks.
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