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Will oil be damned? Crude could fall to 32 dollars and here's why

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Crude has fallen again this Monday, having already hit a six-year low. Saxo's Ole Hansen looks at some of the drivers behind the plummeting oil price including a contraction in Japanese growth. He also focuses on OPEC which is already producing more crude than predicted, warning that production could rise to as high as 33 million barrels a day by the start of next year. The US rig count also rose last week, adding to the price pressure.

Hansen says the long position held by hedge funds was cut by 11% last week - the lowest since December 2012. Increased supply from the US as refinery demand slows is a concern. He points to evidence that the front end of the oil curve is being sold down. 

In terms of levels, Ole says USD 39-40 a barrel is a focus at the moment but he warns of a further sell-off. USD 32.40 was a low last hit in December 2008 following the Lehman Brothers crisis and is a real possibility. But as the price moves down to USD 40, Ole thinks speculative buyers may start to get back into the market.