Oil Plunges To November Lows On Sudden Volume Spike

Oil dropped to the lowest in seven months, with both Brent and WTI sliding to prices not seen since November, following a burst of volume just after 6am, amid a revival in output from Libya and rising volumes of fuel held in floating storage, although today’s move was likely yet another hedge fund capitulating and liquidating long positions. As a reminder, Pierre Andurand was down 17.3% through end of May.

Brent hit new year-to-date low at $45.85, after a one-minute burst of volume of a day-high 5,208 lots at 6:04am, taking out a 38.2% Fib support, after a one-minute spike in volume to a day-high 5,208 lots just after 6am. The move could spur a move toward the $44.66 measured support line according to Bloomberg technician Sejul Gokal.

West Texas Intermediate for July delivery, which expires Tuesday, was down 90 cents at $43.30 a barrel, the lowest since Nov. 14, having dropped as low as $43.22. The more-active August contract fell 85 cents to $43.58. Trading volume +61% vs 100-day average. August Brent dropped -87c to $46.04/bbl; sliding as much as $1.06 to $45.85, lowest since Nov. 18. Brent is trading at a premium of $2.45 to August WTI.

“It’s just ongoing negative market sentiment,” Commerzbank analyst Carsten Fritsch told Bloomberg. “The trend is your friend” unless of course you are a bull. Fritsch added that the market would need “a massive bullish surprise” from inventory data this week for sentiment to reverse

Among the reasons cited for the drop by Bloomberg, none of which are new, is that Libya is pumping the most crude in four years after a deal with Wintershall AG enabled at least two fields to resume production.

Additionally, offshore stores is rising with the amount of oil stored in tankers reached a 2017 high of 111.9 million barrels earlier this month, according to Paris-based tracking company Kpler SAS. With traders again storing more crude at sea amid swelling production in the Atlantic region and a widening contango, this confirms the market is far from rebalancing.

Ahead of tomorrow’s EIA report, consensus is that U.S. inventories probably shrank by 1.2 million barrels last week. Look for an API headfake after today’s close. Crude stockpiles remain more than 100 million barrels above the five-year average, according to data from the EIA. American production has climbed to 9.33 million barrels a day through June 9, near the highest since August 2015.

All the latest oil news courtesy of Bloomberg:

  • Libya is pumping about 900,000 barrels a day, according to a person with direct knowledge of the matter, who asked not to be identified for lack of authority to speak to the media.
  • Oil stored in tankers reached a 2017 high of 111.9 million barrels earlier this month, according to Paris-based tracking company Kpler SAS.
  • There were 5,946 drilled-but-uncompleted wells in U.S. oilfields at the end of May, the most in at least three years, according to EIA estimates.
  • Pierre Andurand’s oil hedge fund lost 17.3 percent in the year through May as one of the world’s most prominent energy bulls suffered in the wake of last month’s OPEC meeting, according to a document outlining the fund’s performance

via http://ift.tt/2rytdEZ Tyler Durden

Leave a Reply

Your email address will not be published. Required fields are marked *