“As long as markets are oversupplied, even if it’s by a shrinking amount, technical factors and the us dollar will remain the primary price-setting mechanisms”, they said.
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“With all of the fundamental signs still pointing to lower prices. the downtrend (is) still the dominant trend in the oil complex”, Dominick Chirichella from New York’s Energy Management Institute said in an analyst note.
Oil has slumped about 46 percent the past year amid speculation a global glut will persist as OPEC continues to pump above its collective quota. Output from the 12-member OPEC bloc fell in October, led by Saudi Arabia’s drop in demand from its domestic power plants and refineries. Venezuela’s Oil Minister Mr. Eulogio Del Pino told reporters in Tehran that Saudi Arabia and Qatar are looking for proposed equilibrium price of $88 per barrel.
Although the increase in USA crude stocks was smaller last week, compared with that of previous weeks, the large amount of stock, which stand at 487.3 million barrels, is another factor contributing to the low price of oil.
US crude’s December futures CLZ5 which expired on Friday ended 15 cents down at $40.39 after hitting a low of $38.99, the cheapest since August 27.
The front-month Brent crude contract was 25 cents higher at $44.43 a barrel at 1000 GMT (5 a.m. ET).
The overhang that has cut prices by more than 10 percent since the start of November kept a lid on prices, and U.S. benchmark West Texas Intermediate (WTI) was on track for a weekly loss. Domestic oil output in the US has fallen by 500,000 barrels per day (bpd) on average since April this year, when production peaked at 9.6 million bpd. We don’t agree with the position that says the market a few way is going to dictate the price of crude oil.
Meanwhile, Venezuela’s oil minister said on Sunday that OPEC can not allow an oil price war and must take action to stabilize the crude market soon. Russian Federation supplied 3.41 million tonnes to China last month, a 16 per cent drop from a record in September, according to the data.
In other markets, Asian shares dragged their feet on Tuesday after a healthcare mega-merger failed to impress investors while the dollar held firm near an eight-month high as investors grew more convinced of a USA rate hike next month.
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In the graph above, you can see the interdependent relationship between crude oil rigs and crude oil prices.
