Global oil falls towards $44 as negative sentiment weighs heavy
Crude fell today as a wave of negative sentiment swept across global oil markets.
Brent crude, the global benchmark, fell 0.36 per cent to $44.56 per barrel in late morning trading. Its US counterpart, West Texas Intermediate crude, also fell 0.77 per cent to $42.80.
The market has been weighing the 'green shoots' of a recovery against signs that this isn't happening as quickly as expected.
Sentiment turned negative due to record output from the Organisation of Petroleum exporting countries and more drilling activity in the US. The glut of oil products has been exacerbated by disappointing demand during the US driving season, and is prompting refineries to buy less crude.
Richard Mallinson, geopolitical analyst at Energy Aspects, told City PM: "The sentiment has turned negative but it doesn't mean the rebalancing has stopped … supplies outside of Opec are falling rapidly [and ]we're still seeing healthy demand growth."
"Towards the end of this year we'll see refineries coming back, purchasing more and prices moving upwards again," he added.
Hedge funds are also increasingly bearish about the outlook for oil, with data released yesterday showing that they've almost tripled their bets against it.
"Money managers speculative positions have been coming off significantly," Abhishek Deshpande, chief oil analyst at Natixis, told City PM
American Petroleum Institute data out later today is expected to show a fall in oil stocks but a rise in petrol supplies. A separate release from the US government on Wednesday is likely to reinforce this.