Traders and investors are massively dashing their bids on crude as rumors and expectations can not anymore underpin the market. Saudi Arabia ruined the hopes for fundamental improvements after prince Mohammed Al-Saud hit the wires in Friday saying current disunity between Iran and other Oil producing nations makes it impossible to freeze output. The news left energy market without footing, sparking off volatility and sending prices down 4 percents in Friday. The drop deepened in Monday, WTI lost 2.88 percents, Brent tumbled 2.48 percents.
Now markets don’t expect anything positive from Doha talks which will be held on 17 April. Iran Oil Minister Bijan Zanganeh said he’ll attend meeting in Doha if he “finds time” meaning country will stand its ground on production freeze matter. The country already has boosted output over 2M barrels with 250K growth in March comparing to February production pace. The efforts of Russia and Saudi Arabia to stabilize market by freezing output on January levels he called a “positive step” which should help to balance prices.
Some analysts was repeatedly warning that rally is not fundamentally supported and markets will inevitably fall into retracement after it. Current decline could be a correction to fundamentally grounded levels which are, considering a drop in US production, should be somewhere $35.
Meanwhile Russia continue to add efforts in a fight for market share, producing 10,912M barrels in March which is 0.3% more than in February. Its the biggest output level not seen from 1987 year (11,5M barrels).
Baker Hughes weekly report showed 10 Oil wells were stopped in US last week, with total 362 rigs operating. US continues to cut down production capacities increasing imports of cheap Oil EIA report showed last week.
Tomorrow crude market will be waiting for API data which will show the change in US Crude inventories. Further growth of crude reserves will worsen oversupply concerns and probably pave the downward way for Oil prices.
To the other news.
US Dollar decline resumes in Monday as traders shrug off after strong NFP release. EUR/USD gains 0.11%, GBP/USD +0.40%, USD/CHF +0.05%. AUD/USD drops 0.92% due to rout on commodity markets, USD/JPY -0.44% as Yen rallies on increasing risk concerns. USD/RUB rallies 1.37% though there are too many ruble bidders trying to wait through the Oil pullback. Withdrawal from ruble support may cause abrupt spike of the pair above 70 level.