Oil prices falls for 7th week in a row

Oil prices are starting the new week of trading with further losses after ending last week down for the seventh consecutive week, the longest losing streak since the beginning of the year. Brent has dipped below $49 per barrel this morning and as such is nearing the 6½-month low it hit a week ago. 

WTI is trading at less than $42 per barrel at only marginally above the 6½-year low it posted at the end of last week. Despite the nearly 30% slump in price since early July, drilling for oil has been stepped up again in the US. According to Baker Hughes, the oil rig count rose for the fourth time in a row last week and for the sixth time in the past seven weeks. 

That said, this is presumably attributable to the significantly higher prices which prevailed until the end of June. The same applies to reports that North Dakota was once again able to scale up its oil output slightly in June to 1.2 million barrels per day. 

Evidently prices of $60 per barrel are already enough to make new shale oil production profitable. At current prices many shale oil producers are likely to come under pressure, however, which should result in less drilling activity and a declining oil output. 

In its current Drilling Productivity report, the US Energy Information Administration (EIA) predicts that US shale oil production will decrease in September for the fifth month running. Money managers cut their net long positions in WTI by just shy of 16,000 contracts in the week to 11 August, thereby contributing to the 6% price slide in the reporting week, says Commerzbank.