SaxoTV

Hansen: Brent Crude is clawing its way towards a bear market

202 views
October 03, 2014 bear, bear market, bear trend, bearish, bearish market, brent, brent crude, brent spread, brent wti, brent wti spread, commodities, commodity, commodity market, commodity prices, commodity trade, commodity trading, crude, crude oil, crude oil prices, crude price, crude prices, crude spread, crudeoil, libya, oil, oil asia, oil commodities, oil company, oil demand, oil drop, oil industry, oil inventories, oil market, oil markets, oil news, oil price, oil prices, oil production, oil spread, oil stocks, oil supplies, oil supply, oil trading, opec, saudi, saudi arabia, saxo bank, saxo bank trading floor, saxo tv, saxotv, wti, wti and oil, wti brent, wti brent spread, wti crude, wti crude oil, wti price, wti supply, wti vs brent, wticrude
Since its peak in June, the price of Brent crude has fallen 19%. As Saxo’s Ole Hansen notes, it means we are close to a bear market, the definition of which is a 20% drop from recent heights. As speculation continues that Saudi Arabia will maintain its output, the likelihood of reaching this point increases.

OPEC is currently producing an extra million barrels of oil a day above its stated target. Hansen says this is creating an oversupply which is being driven by the return of Libyan oil. However he points out that this could be disrupted by increasing conflict within the state.

Hansen also notes that Saudi Arabia’s decision to cut prices to Asian buyers is about staying competitive. He says that because Brent is considered better quality and is now cheaper, Saudi felt it had to act.

Meanwhile WTI’s discount to Brent is at a 14-month low. Hansen’s trade tip is to sell WTI and buy Brent as a spread.