Crude dips in early trade

*Oil prices dip.

*Oil prices dip.

26 October 2015 – Crude prices edged down in early Asian trading on Monday as a weak demand outlook means oversupply will likely remain in place for months and as speculators cut their bets on rising prices.

Front-month US crude futures were trading at $44.58 per barrel ear;y on Monday, 2 cents below their last close and 12.5% lower than their October peak.

Internationally traded Brent was 4 cents lower at $47.95 a barrel, almost 11.5% below its monthly high.

ANZ bank said that it expected prices to remain low for the remainder of this year and that speculators were also cutting their positions betting on higher prices.

“Speculators are cutting bets on rising oil prices. Net speculative (US) long positions declined by 13,841 contracts for the week ending 20 October,” the bank said.

“We remain cautious on commodity prices into year-end given weak demand conditions.”

On the demand side, research firm Energy Aspects said in its quarterly outlook that it “forecast a sharp slowdown in global oil demand across Q4 15 at 0.8 million barrels per day, which marks the slowest pace of growth in five quarters”.

Energy Aspects said that the ongoing oversupply in crude was starting to spill into the market for refined products, with a product stock-build of about 600,000 barrels per day seen in the third quarter.

Rising inventories as well as a mild winter expected for Europe and North America as a result of El Nino would likely lead to reduced refinery production and, by extension, lower use of crude by refiners, Energy Aspects said, adding that global oil markets were “still some way from rebalancing”.

Meanwhile traders are waiting for Germany’s Ifo business climate sentiment for October to be published on Monday, as well as US new home sales figures for September later in the day.

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