Oil prices have been treading water for the most part since yesterday. Brent is trading largely unchanged at $63 per barrel and WTI at $58.5 per barrel. A weaker US dollar no doubt prevented the price slide that one would have expected given the slump in Chinese crude oil imports and the ongoing withdrawal of financial investors.
Speculative net long positions in Brent fell by an additional 15,300 contracts in the week to 2 June, the decrease being almost exclusively attributable to a reduction in long positions. Short positions remained mainly unchanged. Money managers appear to be less and less confident about any further price rise, in other words.
In the past four weeks, speculative net long positions in Brent plunged by almost 30% from the record level they achieved in early May. In the Drilling Productivity Report it published yesterday, the US Energy Information Administration (EIA) predicts that oil production at Permian Basin, Eagle Ford and Bakken - the three largest shale plays - will decrease by a total of 75,000 barrels per day in July. If so, this would constitute the third consecutive monthly decline, says Commerzbank.
An even sharper fall in production will be prevented by significantly higher production per oil rig. The EIA will be publishing its monthly oil market report this evening, which will also contain forecasts for US crude oil production up to the end of 2016.
Two weeks ago, the EIA had undertaken a sizeable upward revision of the previous production figures up to and including March, so it remains to be seen whether the EIA still envisages US crude oil production dropping to below 9 million barrels per day by September, notes Commerzbank.
