Oil price declines after earlier gainsNews // October 21, 2015
Oil prices were under considerable selling pressure early in the week beginning Monday 19 October. Commerzbank reported that Brent shed nearly 4 per cent and closed trading well below US$49/barrel. WTI fell by 3 per cent to just shy of US$46 per barrel.
"There was no real trigger for the price slide," said Commerzbank, "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 (earlier) increase in the price of Brent to a six-week high of US$54 per barrel was thus driven to a major extent by speculation, and is now evidently being corrected. The 9 per cent price rise has been largely reversed again in the meantime.
"The oil price should stabilize in the absence of any new bearish news," said Commerzbank. It noted that representatives of OPEC and non-OPEC countries are meeting in Vienna.
"Although there is little chance of any concrete steps to reduce the oversupply being agreed, the vague prospect of a minimal consensus should at least discourage market participants from betting on further falling prices," Commerzbank said.