Oil plunges on fears of the U.S. stockpiles increase

January 20, 2016

The pressure on Oil increases ahead of EIA data set to be released today. The consensus suggests that U.S. Crude Stockpiles grew last week by 2.7M bbl., increasing the surplus. WTI futures fell by 3.2% to 27.55, breaking the $28 level at ease, while Brent prices dropped by 2% to $28.16.

Market remains clueless regarding the pace at which Iran is planning to return to its pre-sanctions supply levels. This uncertainty creates a possibility for Oil to fall further.

Asian indices are dragged down with bearish sentiments on the Oil market. Chinese index ShComp is down by 1.07%, Nikkei 225 decisively entered the red zone with a 3.71% loss today.

Meanwhile the U.S. Treasury department has reported on Tuesday that the buy-out of U.S. treasuries had been resumed in November after a sell-off in October, which is the first time in nine months.

Risk apprehensions have increased on the impact of series of rate hikes to be done this year so the size of buy-out concluded $31.4B in November comparing to $17.7B of sold bonds in October. Raw data suggested that the amount of bonds sold in October averaged $16.6B.

The majority of Treasury Bills (around $36.3B) went in private hands, comparing to the sale of $36.7B in October. Foreign governments, international and local organizations purchased only $2.02B of the U.S. government bonds after a panic sell-off of $18.4B in October.

According to the recent data, China holds the biggest part of the U.S. debt: around $1.264T, which is the highest from August 2015.

The second largest lender is Japan with $1.145T of U.S. Treasuries on hands. Foreign central banks have controlled about $6.126T of the U.S. debt in November, comparing to $6.048T in October.

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