On Monday, WTI crude oil prices dipped below $40/bbl for the first time since April, after the latest batch of data has investors worried that the infamous global oil glut may be returning. On Friday, a Reuters survey revealed that OPEC output may have risen to its highest level in recent history during the month of July.
In the United States, producers added 44 new drilling rigs last month, the highest number of additions in two years. The latest numbers from the United States and OPEC suggest producers could be getting ahead of themselves.
“It’s stop-loss technical selling combined with sheer liquidation by those fearing we’ll soon [be] swimming in oil again,” PSW Investments analyst Phil Davis explained.
“We’ve had crude builds during the summer, when we were supposed to be having runaway draws from record driving.”
Last week, Reuters analyst John Kemp reported that hedge funds have once again been shorting oil. From May 31 to July 19, hedge funds upped their cumulative oil short position from 53 million barrels to 141 million barrels. The cumulative oil long position remained steady at around 300 million barrels.
Kemp said…
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