DAILY BASKET – NEWS COMMENTARY
HAVE OIL PRICES TURNED DOWN?
MARSAL COMMENTS: Last week was horrible for oil. Prices fell approx. 8% with WTI breaking below US$ 50 and Brent below US$ 53. Speculators seem to have become pessimistic and liquidated their long positions. Will they now turn bearish and short oil?
Despite the oil conference in the Houston (CERAWeek) last week, and despite the chumminess with the shale producers, oil prices fell dramatically.
It was probably, the Saudi oil minister’s warning to the shale producers, that OPEC will not bail them out if they expand too fast and lose. His warning that OPEC may not extend the production cuts, may have been taken too literally by the speculators, who abandoned their long positions.
Some analysts are warning that the unraveling of the rally by speculators may be a long process and could retrace all the gains down to around US $42!!
GENERALLY: Pessimistic and increases volatility
NEGATIVE FOR: Oil producers, for oil exploration and oil investment
POSITIVE FOR: The rest of the world
IMPACT POTENTIAL: (High)
TIME SCOPE: (Short and Medium Term)
READ ORIGINAL: How Much Further Can Oil Prices Fall?