Monday, Aug 31, 2015
Dubai:
A day after a 5 per cent jump in prices of Brent crude post strong set of US GDP data, traders focused back on a supply glut, and demand worries from China, triggering a decline of 3 per cent in prices.
Brent crude fell more than 3 per cent in early hours of New York trade-to-trade at $48.54 per barrel, and WTI crude also fell 2.79 per cent to be at $43.96.
“A speculative washout of overextended short positions caused the knee jerk reaction on Thursday and Friday,” Ole Hansen, head of commodity strategy, Saxo Bank said. On Friday, Brent closed up $2.49, or 5 per cent, at $50.05 a barrel, after hitting a session peak at $50.98. It gained 10 per cent last week.
“Fundamentals in terms of the imbalance between supply and demand are most likely going to get worse before improving the near-term. On that basis many, ourselves included, view last week’s bounce as a selling opportunity,” said Hansen.
A global glut of fuel and sluggish demand have cut oil prices in half from a year ago. Worries over China’s economy have weighed on in recent weeks.
Also weak sentiment in global markets has also been weighing on the black gold. On Monday, stocks in Europe and Asia looked set for their worst monthly losses in at least three years, with investors still concerned about growth in China and the prospect of higher US interest rates. The Dow index also fell nearly a per cent to be at 16,487.61.
“One piece of good news from a producer prospective is that the violent bounce may have resulted in a low now having been established. Traders will be a bit more hesitant about getting themselves to aggressively short below $40,” Hansen added.
Another analyst saw a recovery after initial dip.
“Brent crude may hit a weekly low at $47.1 per barrel, and may recover to hit resistance level at $53.3 by next week,” said Osama Al Ashri, member of British organisation, Society of Technical Analysts.
By Siddesh Suresh ?Mayenkar Staff Reporter
Gulf News 2015. All rights reserved.
