Oil in danger of sharp reversal

1 March, 2017

Oil in danger of sharp reversal

The price of oil has pulled back today after a Jump in US oil inventories which analysts say offset any production cuts from OPEC.

Ever since oil broke through the $50 mark, US producers have been increasing production in order to take advantage of higher prices with some predicting this may lead to an oversupply and a subsequent drop in prices.

"Though the rate of efficiency gains in U.S. shale oil drilling will slow as time progresses, we still expect total production to expand as the number of rigs increase. This will weigh on prices," said Capital Economics analyst Caroline Bain.

Another factor that may hurt the oil price, is the number of long speculative contracts held by investors at the moment, who believe the price is headed higher but may opt out should things turn sour,

"Increasingly, the high degree of speculative interest is hanging over oil prices like the sword of Damocles. If financial investors were to unwind their positions, a sharp fall in prices would be on the cards," Commerzbank said in a note to clients.

Analysts at PVM also believe a dangerous situation for investors is at play,

"The guessing game is in full swing as which direction oil prices will break out of their current range. It is fair to say the voice of those who are expecting higher prices in the coming months is louder than that of their rivals," PVM said, but warning that "if current longs decide to run for the exit, there will only be one way for oil prices to go". They noted.


Source link  
RBA misleads investors on AUD

The Australian dollar has dropped sharply in today's Asian trading session on the back of disappointing data and throws into question yesterday...

Brexit doubts pressure pound

The British pound has enjoyed a good run against its US counterpart ever since rumors spread that the EU and the UK were close to reaching a deal...

Gold steady ahead of key news

The gold price is trading slightly higher today as the market awaits the senate testimony later today from Jeremy Powell who is Donald...


Gold looks to go past $1300

The gold price remains well supported today after yesterday’s stellar gains on the back of a less than convincing speech from The US Federal Reserve...

Gold remains supported

After falling sharply on Monday, the gold price has stabilized over the last 2 days and it looks as if for now, the precious metal has found strong...

US dollar hit from 2 sides

The US dollar is under pressure against the major currencies today as fears grow over the possibility of tax reform as well as disastrous results...


Australian dollar has further to fall

The Australian dollar is under further pressure today after yesterday’s spectacular plunge which seems to have put to bed any interest rate hike...

Gold technical review

The gold price has finally stabilized today after suffering 3 days of heavy losses and we may be in the process of a double bottom formation. It seems as if the news out of Spain...

Oil set to rebound

The Oil price has finally settled in today’s trading after a week of heavy losses on the back of profit taking and some say that the price may once again head higher. Following a solid month of gains...

  


Share: