Crude extended its slide from an 11-year low, confirming the view of hedge funds that cut bullish price bets to the lowest since 2010.
Futures fell as much as 2.5 percent in New York after dropping more than 10 percent last week. Speculators’ net-long position in West Texas Intermediate fell 24 percent in the week ended Jan. 5, data from the U.S. Commodity Futures Trading Commission show. Producer prices in China fell for a record 46th month and inflation remained at about half the government’s 2015 target, fueling concern of further weakness in the world’s biggest energy user.
“Sentiment indicators are all to the extreme sell,” Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone. “Until we see a supply-side response, the potential for significantly higher prices is low.”
Oil slumped last week as volatility in Chinese markets fueled a rout in global equities and U.S. stockpiles remained about 100 million barrels above the five-year average. Saudi Arabian Oil Co., the world’s biggest crude exporter, confirmed on Friday it was studying options for a share sale, including listing “a bundle” of refining subsidiaries, according to a statement from the state-owned company.
WTI for February delivery fell as much as 83 cents to $32.33 a barrel on the New York Mercantile Exchange and was at $32.51 at 1:52 p.m. Hong Kong time. The contract slid 11 cents to $33.16 Friday, dropping for a fifth day to close at the lowest since February 2004. Total volume traded was about 47 percent above the 100-day average. Prices lost 30 percent last year.
Brent for February settlement decreased as much as 91 cents, or 2.7 percent, to $32.64 a barrel on the London-based ICE Futures Europe exchange. The contract fell 20 cents to close at $33.55 on Friday, the lowest since June 2004. The European benchmark crude was at a premium of 29 cents to WTI.
Speculators’ net-long positions in WTI fell by 23,863 contracts to 76,934 futures and options, the lowest since July 2010, CFTC data show. Longs, or bets that prices will rise, dropped 2.5 percent to the lowest since July, while shorts climbed 11 percent.
Saudi Arabian Oil, known as Aramco, is studying whether to list “an appropriate percentage” of shares of the parent or a bundle of “downstream” units, according to an e-mailed statement Friday. The findings of the review will be presented to the board of directors, which will make recommendations to the company’s Supreme Council, Aramco said.