Last Friday WTI prices plummeted 3.5% to $46.77, marking the 7th consecutive weekly decline since June. The dollar was under pressure from negative US consumer confidence, pushing oil to hit the daily high at $48.60.
Today, oil prices stabilize at $ 46.62, down 0.3% compared with the opening price.
ICE Brent put options outnumbered double the number of call options by 2:1 in the next 12 months. Investors are not very optimistic on oil prices and said that hedging with options contract against lower price at the moment is reasonably cheap.
According to the Commodity Futures Trading Commission (CFTC), investors had cut 2,497 WTI futures contracts to 105.199 contracts last week.Demand for gasoline has increased but not enough, and the supply does not response in the way that the market is expecting.
“What’s happening is the market is coming to terms with the fact that these lower prices have not resulted in any significant change in supply/demand economics,” ICAP oil broker Scott Sheldon said. (Reuters)
Baker Hughes said last week the United States has added another five rigs despite the plunge in oil prices during the last 7 weeks. Whereas, Royal Dutch Shell plans to cut 6,500 jobs, Centrica cut 6,000 jobs and Chevron is to cut 2% of worldwide labor force, but the output is not necessarily reduced when efficiency and costs are improved.
According to the Reuters survey, OPEC oil production in July rose by 140,000 bpd to over 30 mbpd. US output peaked up to 9.7 mbpd in March and remained at 9.5 mbpd in the next 2 months.
Asian oil imports from Iran rose more than 13% in June compared with the same period last year, Iran is eager to regain its position in the market.
Tonight the US will release personal spending and personal income in July, as well as ISM manufacturing PMI later. Recently, the dollar had a significant impact on the oil market. If the dollar rose, oil prices will fall, and vice versa.
Forecast: WTI could fall slightly to $46.00 after returning to around $45.90 in European session.