Last week the downtrend at the crude oil market continued. The price of WTI futures lost 2.7% and declined to $46.59 per barrel. The local bottom of the price of WTI crude ($44.4 per barrel) was reached on 11th July. Nevertheless, the price of crude attempted to go up the next day, and reached $46.49 per barrel, a rise of 4.6%.
The price of Brent crude oil lost 2.1% in the same period and fell to $48.2 per barrel. On 7th July the price broke the important support level of $47 per barrel and went down by 5.6% to $46.48 per barrel. Moreover, the price began to test a new support level – $45 per barrel – but this level was just too tempting for traders to abstain from making a purchase and so by 12th July the price of Brent had risen to $48.2 per barrel.
Crude oil Brent future price, 27th June – 12th July, 2016
The petroleum market data announced the last week disappointed the commodity market bulls, but pleased the bears. Commercial oil stocks in the US fell by 2.22 million barrels, while the market expected the drop to be more than by 2.25 million barrels. Although the difference of the forecast from the actual data was negligible, the bears began to sell crude oil futures. According to the Baker Hughes report, the number of active drilling rigs rose by 10 units to 351 rigs last week, and traders understood this data as an additional bearish factor for the petroleum market.
According to S&P Global Platts, OPEC countries increased their crude oil production in June by 300,000 barrels per day to 32.73 million barrels. This is the highest level for the recent 8 years, and that was the key bearish factor for the petroleum market last week.
We expect the price of Brent next week at the range of $46.5-49.5 per barrel, WTI could remain in a range of $45.8-47.0 per barrel.