Financial investors could sell off their oil investments due to higher risk aversion

Oil prices are down as the new week of trading begins. Brent has fallen below $62 per barrel, while WTI is priced at less than $58.5 per barrel. 

The escalation of the debt crisis in Greece (see Precious metals below) has generated increased risk aversion and is thus putting pressure on risky assets - which include crude oil as well as equities. The significant appreciation of the US dollar due to the threat of Greek national bankruptcy is likewise having an impact on oil prices, states Commerzbank. Given all these adverse factors, money managers could decide to sell off their oil investments. 

According to the CFTC, the week to 23 June saw speculative net long positions slightly reduced by 3,200 contracts. They still find themselves at the relatively high level of just shy of 236,000 contracts, however, meaning that there is further correction potential here. 

The ICE will be publishing the corresponding data for Brent at lunchtime today. Speculative net long positions in Brent have recently fallen for six straight weeks. There are increasing signs that drilling activity in the US is bottoming out. The fall in the oil rig count continued last week, albeit at a slower pace.

According to Baker Hughes, three further oil rigs were shut down, making for the 29th weekly reduction in a row. By contrast, the gas rig count increased by five, meaning that the overall oil and gas rig count saw a weekly rise for the first time in more than half a year. This could also weigh on oil prices, says Commerzbank.