Oil prices increase sharply after recent days’ slumps
West Texas Intermediate Futures are changing in these moments (10:45 hours GMT + 1) to $31.32 in the New York Mercantile Exchange, which is 2.86 percent more, while Brent futures are priced at $31.24, 2.85 percent more in the London futures market. This increase is produced after the serious slump of last days, with oil prices falling to more than 12 year lows.
Fears about Beijing’s economy: it will harm the crude global demand
Fears about the crude global demand being affected by Beijing’s weak economy have joined since the beginning of the year to the oversupply scenario that is hitting the market since mid-2014. Meanwhile, the strength of the US dollar as opposed to other currencies is not facilitating the recovery of prices. Oil futures are being traded in US dollars in international markets and its importance when compared to other currencies hampers investments from foreign countries.
Depreciation of OPEC barrel is affecting producing countries, which will hold an extraordinary meeting
The ongoing loss of the oil barrel value is hitting producing countries, including members of the Organization of the Petroleum Producing Countries (OPEC) which, as they refuse to lower their production peak, have contributed to the slump in prices. Although some partners of the organization such as Venezuela, Ecuador and Nigeria are exerting pressure to modify the OPEC’s policy, Saudi Arabia has imposed its position of maintaining the historic pumping levels in order to damage the emerging US shale industry, and maintain its market share. Despite all the above, low prices have led the group to announce an extraordinary meeting during which they will analyze their strategy once more. The Nigerian minister of Oil Resources, Emmanuel Ibe Kachikwu, current president of the organization, said in advance that the group will hold a meeting again in February or March.
BP to lay off 16 percent of its workforce
British oil company BP will dismiss 16 percent of its workforce over the next two years. Specifically, the company will make staff cuts of up to 4,000 employees in the upstream area, so the total workforce would fall below the 20,000 workers as opposed to the current 24,000 workers by the end of 2017, according to the company. One of the areas most affected by these cuts will be the North Sea, where 600 workers out of the current 3,000 employees will be dismissed. The regional president of BP for the North Sea, Mark Thomas, said that such adjustments are “inevitable” to deal with the fall in oil prices, which are below $31 per barrel. The move, which will affect contractors, will take place especially along this year.
Net long positions drop
Net long positions of speculators for WTI fell by 23,863 contracts to 76,934 futures and options, the lowest level since July 2010, according to data revealed by the CFTC. Long positions (bets for price rises) fell by 2.5 percent and reached their lowest level since July, while short positions rose by 11 percent. However, speculators had a different scenario for Brent crude. Fund managers increased their net long positions for Brent by 21,380 contracts, to 185 520, their highest level since November 10. The largest number of long positions was 321,067 blocks, and was recorded in May last year. The fall in prices has led oil companies to reduce expenditures, setting the stage for a market recovery later this year, said Mike Wittner, head of oil market research at Société Générale SA in New York. Post by: Francisco Neri Bonilla