Speculative financial investors withdraw from Brent for the seventh consecutive week

Oil prices fell sharply yesterday, both Brent and WTI shedding approx. 2%. Brent closed trading at $62 per barrel, its lowest closing price since mid-April, and is trading only marginally above this mark this morning. At $58 per barrel, WTI is at its lowest price in three weeks. Unlike with gold, the Greek crisis is thus proving to have a lasting impact. According to ICE data published yesterday, financial investors continued to withdraw from Brent for the seventh consecutive week. 

Speculative net long positions fell by a further 1,500 to 193,800 contracts in the week to 23 June, and have now plunged by 34% since their early May record high. In other words, financial investors are one factor weighing on the Brent price. Today is the deadline by which a solution was finally supposed to be found in the nuclear talks with Iran, but opinions still differ about when sanctions should be lifted and how long Iran has to agree to its nuclear facilities being monitored. It is therefore unlikely that an agreement will be achieved today. 

When the interim agreement was reached at the end of March, negotiations were extended by several days. If sanctions were to be eased, additional oil from Iran would flood onto the already oversupplied oil market, says Commerzbank. The Reuters and Bloomberg production surveys today are expected to show that OPEC again produced considerably more crude oil than the market required in June, so oil prices are likely to fall further, notes Commerzbank.