Brent crude surges above US$40News // March 9, 2016
Oil prices are continuing to surge, with Brent and WTI gaining 5.5 on 7 March 2016. For the first time in three months, Brent climbed above the US$40 per barrel mark, achieving US$41 per barrel at its peak yesterday. WTI rose to as much as US$38 per barrel, its highest level since the beginning of January.
Commerzbank Research said Brent was trading above the 100-day moving average for the first time in eight months, which is likely to have triggered technical follow-up buying. Buying by speculative financial investors is boosting the price rise.
According to positioning data published yesterday by the ICE, speculative net long positions in Brent increased by a further 15,400 to a new record level of 326,100 contracts in the week to 1 March. Bets on rising prices have thus almost doubled since the start of the year.
In February, China imported a record 8 million barrels of crude oil per day – 20 per cent up on last year. Part of this total doubtless went into building up stocks, meaning that imports in the coming months may well be somewhat lower. China is likely to have overtaken the US as the world’s largest crude oil importer last month.
According to the available weekly figures from the US Department of Energy, US crude oil imports totalled 7.8 million barrels per day in February. Meanwhile, there are increasing signs that US oil production is responding to the slump in drilling activity: according to the Energy Information Administration (EIA), US shale oil production looks set to decrease by 106,000 to 4.87 million barrels per day in April. This would be the sixth consecutive decline and the lowest production level since July 2014.