Commodity Update; Crude Oil – 14 October 2014

Crude oil closes the week lower again, despite increase in net long exposure of investors

Oil benchmarks fell once again last week despite CFTC(Commitments of Traders) reports of a notable increases in net long positions from speculative financial investors.

Much of this additional weakness appears to have been driven by concerns over global economic growth, with both China and the US reporting poor performances from inflation and retail sales numbers during the period.

Despite this, both Crude benchmarks managed to pare some losses going into the close on Friday and at the open of the new week. This was as US consumer confidence and housing data trumped forecasts on Friday, while Chinese GDP and industrial production measures also outperformed against projections on Tuesday morning.

As a result, both Brent and WTI benchmarks are now perched at $85 & $82 per barrel respectively, after having fallen to $83 and $80 at their troughs for the week. However, the economic calendar sees key inflation data emerging from the US n Wednesday, along with several major releases from the euro-zone.

With this and the recent underperformance of European data in mind, it is not possible to rule out further losses for crude oil prices this week, although we would expect any sell off to begin to run out of steam at the $80 per barrel mark on Brent and $75 for WTI.

Brent/WTI Crude Overlay

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