Oil prices rose last week with Brent crude reaching its highest since March, following a 2.2% weekly rally to settle at $56.86/bbl last Friday. WTI failed to follow the pace of Brent and only rallied 1.5% to end the week at $50.66/bbl. Monday morning sees crude markers with minor losses, but broadly holding their ground.
The US Dollar index was up 0.2% earlier this morning. The euro slipped after Germany’s election showed surging support for a far-right party that left Chancellor Angela Merkel scrambling to form a governing coalition.
Speculators in the US lifted their net long position by a steep 50.4 million bbl to 208.3 million bbl, from 157.9 million bbl in the week prior. The net gain was an outcome of rising longs by 27.43 million bbl w-o-w and declining shorts by almost 23 million bbl.
Producers held their net position almost flat last week as the 10.6 million bbl gain in longs was largely offset by a gain of 9.62 million bbl in shorts.
Active rigs drilling for oil reduced by five units last week compared to the week prior. With the exception of Bakken, which saw the removal of three units from its active fleet of rigs, shale plays elsewhere in the US saw little change in their operating rigs. Unconventional production of crude oil in the US is expected to stand just above 6 million bpd in September, while it is likely to rise to 6.08 million bpd in October, according to EIA projections. However, certain US producers maintain that the EIA has exaggerated US production, mounting pressure on WTI prices.
The Oil Research Team
Supply Chain & Commodities Research