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Crude in a Mood: Oil Enters Bear Market as Growth Fears and Inventory Swelling Drive Risk-Off
Jun 05, 2019
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
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
Read more on jobs data:
Paucity of Positions: ADP data today shows fewest new jobs added in May since 2010
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
Read more on PMI readings:
Battle Scars: US Manufacturing PMI unexpectedly tanks in May, lowest since October 2016, as trade war rages
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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