According to National Bank of Canada’s analyst, Krishen Rangasamy, deceleration of world GDP growth put the oil market in excess supply again and added that speculators are ditching net long positions at the fastest pace on records.
Key Quotes:
“What exactly caused such a sudden change of fortune for oil? The deceleration of world economic growth ─ as evidenced by ugly Q3 GDP results (in places such as Japan and the Eurozone) and weak purchasing managers indices for early Q4 ─ has clearly hurt demand for oil.”
“On the supply side, Saudi Arabia is pumping oil like never before, its output surging to a record 10.6 million barrels/day in October. Iraq’s output is also on the rise as production from the Kirkuk region comes back online. Those are more than offsetting declines in sanction-hit Iran.”
“Supply from outside OPEC also remains strong particularly with U.S. oil production surpassing 11.5 million barrels/day for the first time according to the EIA.”
“The global oil market seems to have flipped back to a situation of excess supply. The resulting decline in oil prices, however, is being inflated by speculators.”
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