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Crude Falls to Near 12 Year Lows

Oil prices fell for a sixth session to trade at almost 12-year lows on Monday as concerns about China’s economic slowdown, reflected in a renewed slide in its stock markets, weighed on the outlook for demand this year.

Traders increased bets against any near-term recovery in the oil price and Brent crude futures were down by 63 cents at $32.92 a barrel by 1200 GMT, off 15 percent in a week. U.S. West Texas Intermediate (WTI) crude futures fell 48 cents to $32.68.

Speculators increased their net short positions to a record high in the week to last Tuesday, data showed on Friday, in a sign that they are losing faith in a price rise any time soon.

Analysts pointed to China’s economic slowdown, which has seen the yuan weaken and two emergency suspensions in Chinese equity markets last week, as the main reasons for lower oil and commodity prices.

On Monday, turbulence gripped Chinese markets again, as blue-chip stocks fell by another 5 percent and overnight interest rates for the yuan outside of China soared to nearly 40 percent, their highest since the launch of the offshore market.

“If the first week is anything to go by we are in for a long, volatile and very exhausting year. The week started on a bad note and ended on a good one but the market response, worryingly, was the same to both – sell, sell, sell,” David Hufton, of oil brokers PVM Oil Associates, said in a note.

via Reuters [1]

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Alfonso Esparza

Alfonso Esparza [6]

Senior Currency Analyst at Market Pulse [7]
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza
Alfonso Esparza

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