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What a difference six weeks make

Tuesday, 11 June 2019 | 00:00

Hedge funds have continued to run away from oil as prices tumbled into a bear market, cutting bets on West Texas Intermediate crude to the lowest level in 12 weeks, according to data released Friday. Optimism on Brent crude, the global benchmark, declined by the most this year.

What a turn of events. Only six weeks ago we were writing about the bullish sentiment in the market and now look where prices have ended up. We even started to see a sprinkle of $100 per barrel stories entering the airwaves.

We guess those people who predicted that are keeping incredibly quiet of late. Morgan Stanley has said that demand by major consumers including the United States, China, Japan, Australia, South Korea, Brazil, India, and Thailand has been notably weak—and those eight countries represent 48 percent of global oil demand.

This, coupled with large U.S. oil inventories has pushed the oil picture from one of risks and rising prices to faltering demand and falling prices. China’s crude oil imports slipped to around 40.23 million tonnes (9.47 million barrels per day), down from an all-time peak of 43.73 million tonnes in April, customs data showed on Monday, as the world’s top importer of the commodity curbed shipments from Iran amid tighter U.S. sanctions.

The technical support levels just above $60 have held under this price drop onslaught, giving the market enough support to get itself back up towards the $65 this morning.
Source: Freight Investor Services (UK)

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