OIL: Another low for the markets as Brent drops to $60.92

By Jameel Ahmad, Chief Market Analyst, FXTM

Although the oil markets are attempting some sort of rebound as European trading begins, both Brent and crude opened trading by recording further lows on Monday. Brent dropped to $60.92, while crude declined to $56.71. The bears are continuing to exploit the economic conditions that are aggressively against the oil markets at present. Despite already having dug down through various psychological support levels over recent weeks, there is still no floor in sight. Early morning comments that OPEC will not cut production even if crude drops to $40, only serve to re-emphasise the longer-term bearish outlook.
The only upside opportunities for oil at present is speculation of further easing from the People’s Bank of China (PBoC), or USD softness encouraging the momentum to swing higher. It is worth noting that despite the USD weakening on Friday afternoon amid the lower-than-expected US PPI figure encouraging speculation the Federal Reserve will make a dovish comment regarding inflation expectations, both Brent and crude failed to show any increased demand. The weaker USD provided oil bulls with an opportunity to bounce back, but the failure to do so illustrates that there is just no demand for the commodity.
The fears around an oversupply of oil are refusing to go away, with anxiety around the issue heightening even further at a time when resurfacing questions over the global economic recovery are continuing to dominate headlines and leading to the fear that there will be even less demand for oil.

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