As oil tittered toward the edge of the $40 per barrel mark for the first time since August, investors have demonstrated pessimistic sentiments.
Investors Pessimistic As Oil Nears $40 a Barrel
In the week that ended November 10, short-run bets on West Texas Intermediate by money managers increased by 21 percent, according to figures from the Commodity Futures Trading Commission. Meanwhile, the net long-run position fell by 16 percent.
In developed countries, oil inventories have increased by an estimated 3 billion barrels due to the enormous supplies from both OPEC and non-OPEC crude oil producers, according to reports by the International Energy Agency.
West Texas Intermediate declined to its lowest since August as close to 40 oil tankers wait offloading at Galveston Texas.
Speaking to Bloomberg Business, Michael Lynch, president of the Massachusetts-based Strategic Energy & Economic Research, “There have been rising concerns over the excessive supply and these concerns have been reinforced by the IEA report.”
On the New York Mercantile Exchange, futures were down to $41.29 per barrel while on Monday, the prices came down to $40.06, the lowest since August before recovering by almost 2.5 percent.
Increases in global production
The Organization of Petroleum Exporting Countries said that oil inventories increased due to a surge in global oil production.
Speaking about the increase in inventory, Sarah Emerson, managing director of ESAI Energy Inc. in Wakefield said, “It is our view that the next few months will be very weak.”
She added, “The focus right now in the market is on inventories. Unless we have a disruption, prices will not rally in the coming year.”
On Monday, oil rose slightly after falling to below $40 following a weekend of terror attacks in France.
Tim Evans of New York-based Citi Futures Perspective said, “It doesn’t look like this will have any major impact on oil supply.” He added, “The major concern in the market right now is excessive supply.”