Monday, 11 January 2016

Oil Prices drop over 2% as Market loses Faith in Rebound

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US crude oil prices were down more than 2 percent in early trading on Monday as traders increasingly lose faith in a significant market recovery soon and bet on even lower prices. 

US crude West Texas Intermediate (WTI) CLc1 dropped more than 2 percent in early Monday trading to a low of 32.43 per barrel before edging back to USD 32.51 by 0038 GMT (07:38 p.m. EST), still down 65 cents. Global benchmark Brent LCOc1 was down 59 cents, also almost 2 percent, to USD 32.96 per barrel.

 Monday's falls add to an over 10 percent price drop in the first trading week of the year and when Goldman Sachs said oil could hit USD 20, and would see sustained low prices through the first quarter "so producers will move budgets down to reflect USD 40 a barrel oil for 2016." 

In a sign that traders are losing faith in a price rise anytime soon, big speculators have cut their net long positions to fewer than 50,000 contracts or 50 million barrels in the week to last Tuesday, a weekly report from a US government agency that tracks commodity markets activity showed on Friday.

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