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WTI breaks below $50 bbl

Published Tuesday, January 6th, 2015

The force was firmly with oil bears in the first full day of trading of 2015. Crude prices broke down to levels last seen in the spring of 2009. Brent fell to a low of $52.66 and closed at $53.11 (-3.31). WTI fell to $49.68 and closed at $50.04 (-2.65). Heating oil lost 4.65cts/gal (174.92), RBOB 5.20 cts/gal (138.14) and Gasoil $23.75 pmt (495.50).

It was a truly awful beginning of the year for oil producers. Over the Christmas/New Year break Saudi Arabia made it clear that it will not intervene and wants “the most efficient producers to prevail”. The UAE oil minister says that “we are not interested in short term fixes because we know they will not last”. In other words band aid production cuts are a strategy of the past.

In yesterday’s FT the Iranian oil minister is quoted as saying that Iran “will not lose market share under any condition…and will increase production regardless of prices when sanctions are lifted”. Russian oil production is at post-Soviet era highs and Iraqi exports at post 1980 highs. Saudi Arabia has announced further price reductions for deliveries to Europe and the US. On top of this deluge of bearish news the dollar index rose to a nine-year high.

to read the rest of the report, please click here

Posted by David Hufton