In the past fortnight, WTI and Brent oil prices declined by around 8.5 and 10 per cent, respectively, while on the MCX prices declined by around 10 per cent in the same time frame.
Oil prices which have been trading in a narrow range of $3 for most of 2017, and now it has finally trended down south as prices declined heavily in the past two trading days of the last fortnight. The supply side dynamics in oil markets have ensured that bears have taken the prices down to the three-month lows.
The prime reason for such a drastic fall in the past fortnight was on account of high crude oil inventories in the US. Inventories have been rising steadily since the start of 2017. As on 3rd March 2017, crude inventories in the US stood at around 528.39 million barrels, which is an increase of around 49 million barrels compared with December 31, 2016, when inventories stood at around 479 million barrels.
Crude inventories have risen, partly on account of refinery maintenance and partly on account of low demand. Nonetheless, US drilling has also picked up, with producers planning to expand crude production in North Dakota, Oklahoma and other shale regions, while the Permian, America’s largest oilfield, has seen output jump.
Market confidence has taken a hit after a period of higher prices enticed more US shale oil companies to drill more wells and as stockpiles have remained high.
Talking about speculative positioning, hedge funds and money managers were net longs at around 443,703 contracts as on 21st Feb 2017, while these positions are liquidated and the current net longs as on 28th Feb stood at around 421,171 contracts. CFTC positioning for the week ending March 7, is yet to publish, and this is exp . Read More…
Credit By: economictimes.indiatimes.com
Latest posts by economictimes.indiatimes.com (see all)
- Railways eliminates 3,402 unmanned crossings in 7 months - November 3, 2018
- This is how the situation looks after Centre’s cut in fuel prices - October 4, 2018
- Centre Gives Rs 2.50 Per Litre Relief on Petrol, Diesel; Some States Announce Additional Rs 2.50 Cut - October 4, 2018