Oil prices were under considerable selling pressure yesterday. Brent shed nearly 4% and closed trading well below $49 per barrel. WTI fell by 3% to just shy of $46 per barrel. There was no real trigger for yesterday's price slide, which was probably due to a variety of factors that prompted the sell-off, such as weak Chinese data, declining crack spreads for oil products, the prospect of growing oil production from Iran and speculative sales.
The latter is suggested by the fact that speculative net long positions in Brent were significantly expanded by 17,700 to 207,100 contracts in the week to 13 October, putting them at their highest level in nearly three months. The increase in the price of Brent to a six-week high of $54 per barrel was thus driven to a major extent by speculation, and is now evidently being corrected. The 9% price rise in the reporting week has at least been largely reversed again in the meantime.
"The oil price should stabilize in the absence of any new bearish news. A renewed steep rise in US crude oil stocks should no longer come as a negative surprise in view of the lower rate of crude oil processing for seasonal reasons", suggests Commerzbank.
