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Crude Oil Prices Fall And Hit A 6-Month Low Attributable to Panic Promoting

This series analyzes crude oil prices and fundamentals. For an in-depth fundamental look at oil and fuel and associated firms, sectors, and drivers, please refer to our Energy and Energy page.

September WTI (West Texas Intermediate) crude oil futures contracts trading in NYMEX fell by four.14% and closed at $forty five.17 per barrel on August 3, 2015. Crude oil prices fell on account of panic promoting and growing issues over the Chinese language financial slowdown in the oversupplied crude oil market. The US benchmark following ETFs like the United States Oil Fund LP (USO) and the ProShares Extremely DJ-UBS Crude Oil (UCO) also fell in the course of WTI crude oil prices. These ETFs fell by three.14% and 6.32%, respectively, on the shut of trade on August three, 2015.

What’s impacting crude oil
The world’s largest crude oil importer and the second largest crude oil shopper are driving pessimistic sentiments within the crude oil market. The estimates of disappointing manufacturing stories fueled considerations concerning the health of China’s manufacturing sector. The global markets have already witnessed the Chinese inventory market collapse. The manufacturing numbers are used as indicators for is diesel oil a petroleum product gas demand progress. The disappointing manufacturing information and Chinese language stock market crash further cement the issues about the slowing demand from China. Slowing imports from Japan and speculation of a European slowdown will impact the worldwide crude oil demand. There’s additionally hypothesis of slowing demand from the US.

On the provision side, record production from Saudi is diesel oil a petroleum product Arabia, report exports from Iraq, and report output from OPEC (Organization of the Petroleum Exporting Countries) will proceed to place downward strain on crude oil costs. Boosting oil output from Iran will also add to the crude oil glut.

It’s important to recollect the rising crude oil production from the US, Russia, and Brazil in the crude oil glut market in 2015. Goldman Sachs reported that the current rig depend implies that US output may fall in 3Q15 and continue to rise in 1H16.

The strengthening US dollar may make dollar-denominated crude oil costly. In flip, it will curb the demand for oil from importing nations.

The doable weakening demand from US refineries, as a consequence of upkeep from August via October, could additionally affect the crude oil market.

Job layoffs and decrease oil costs
The latest collateral damage in the crude market has led to job layoffs by oil corporations like BP (BP), Shell, Schlumberger (SLB), and Halliburton (HAL). These companies announced job cuts as a result of they expect crude oil prices to remain lower for years. Crude oil prices fell greater than 55% since mid-week of June 2014. Consequently, the oil and fuel business has eliminated 150,000 jobs, in response to estimates from Graves & Co.—a Houston-primarily based advisory firm. Likewise, hedge funds have diminished their bullish or long positions to the bottom ranges in the final five years.

All of these parameters are driving oil prices decrease. Crude oil costs fell more than 27% from the Could 2015 peak of $sixty two per barrel. Prices have fallen more than 15% YTD (yr-to-date). Lengthy-time period oversupply issues and slowing demand are butchering oil prices. The Bloomberg Commodity Index also fell more than 11% in July 2015 to the bottom level since 2002.