Crude Oil to deal in a steady range this week

That’s because it wants to maintain, if not increase, its control of the oil market. At 487.3 million barrels, US commercial crude inventories still remain near levels not seen in at least the last 80 years.

Data from oil service company Baker Hughes released Friday showed that the number of active US oil-drilling lost 10 to 564 of this week.

Goldman and other analysts say persistently high U.S. shale oil output that producers aren’t allowed to export could overwhelm the country’s storage tanks, which are already filled with near-record inventories.

U.S. crude’s West Texas Intermediate (WTI) January contract also shed 31 cents or 0.74 percent at $41.59 a barrel against its previous settlement at $41.90. “And frankly, it is a lot easier politically at first to deliver a modest crude oil supply cut than to implement a full-blown currency devaluation”, BoAML analysts said.

United States crude oil prices affect energy MLPs differently.

Hedge funds are betting OPEC won’t do anything next month to keep crude oil above $40 a barrel.

“Todd Gordon of TradingAnalysis.com begins by noting that in the financial crisis, crude oil fell 77 percent from its highs”, according to CNBC. In response to the question of how low oil prices could go next year if Opec fails to take action, del Pino said “mid-20s”.

According to the CME Group, traders held over 20,000 December put option contracts at $40, giving them the right to sell a Nymex futures contract if the price falls to the level.

“Oil markets are really moving range bound… mainly because fundamentals have yet to change”, said Daniel Ang, an investment analyst at Phillip Futures Pte Ltd.

“There is a big drop in the production capacity of oil wells across the world, estimated around 4 million barrels a day, which means the petroleum industry needs new additional production capacity of around 5 million barrels a day every year…to meet the global demand”.

Brent crude oil futures traded near three-month lows on Friday as the pressure of a persistent supply glut quashed any optimism about a price recovery.

IEA forecasts global demand growth to slow to 1.2 million barrels a day in 2016 after surging to 1.8 million barrels a day this year.

He said the market would be watching if oil prices at near US$40 will boost oil demand as expected by a few crude producing nations.