Profit taking put pressure on oil prices

Oil prices slumped by 5% yesterday, suffering their sharpest daily loss since early September. Brent closed trading at below the $50 per barrel mark and WTI at $47 per barrel. 

The decline in prices is doubtless due to profit-taking by speculative financial investors after prices proved unable yesterday to regain the multi-week and multi-month highs they had achieved on Friday. Previously, investors had played a major part in the price surge through their purchases. 

In the week to 6 October, speculative net long positions in WTI climbed by almost 24,000 contracts, while those in Brent increased by 13,500 contracts, notes Commerzbank. In both cases, net long positions found themselves at their highest levels since July on the reporting date, and are likely to have risen further in the subsequent days given that prices continued to climb until Friday.