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Crude in a Mood: Oil Enters Bear Market as Growth Fears and Inventory Swelling Drive Risk-Off

Jun 05, 2019

We Crunch the Numbers, You Make the Trade.We Crunch the Numbers, You Make the Trade.
We Crunch the Numbers, You Make the Trade.We Crunch the Numbers, You Make the Trade.

 

  • Crude oil is selling off today on a combination of growth fears and growing inventories, with WTI entering bear market territory today
  • WTI crude touched $50.68 late today, down well over 20% from its peak in April of over $66
  • Brent Crude traded below $60 today, touching $59.65, before recovering somewhat to just over $60

 

WTI Crude Future Price YTD

wti futures

Source: Bloomberg

 

  • Today’s weakness comes in the wake of weak ADP jobs data that fuels growth fears and inventory data that came well above expectations
  • US total petroleum inventories grew by 22 million barrels, the biggest jump in since 1990
  • Inventories swelled due to a jump in imports and record production
  • The US set another oil production record this month, producing 12.4 million barrels
  • Weak manufacturing PMI around the globe fuel fears of lower crude demand
  • The continued weakness in oil prices makes analysts believe that OPEC will extend production cuts when it meets next in Vienna next month
  • The weakness is also being fed but a huge reduction in speculative bets on oil, the Commodity Futures Trading Commission reports that bullish bets on oil dropped to 5-to-1 from an April high of 14-to-1
     

 

 

 

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