U.S. drilling activity on downward trend

Brent is trading at below $48 per barrel as the week begins, while WTI is priced at less than $45 per barrel.  In the wake of surprisingly strong US labur market data, the oil prices have come under pressure from a firmer US dollar.

The improved demand outlook in the US, the world's largest oil consumer country, hired just as little support to prices due to the renewed fall in the oil rig count in the US: according to Baker Hughes, it decreased by a further 6 last week, the tenth consecutive weekly decline. 

However, drilling activity has come down to its lowest level since June 2010 and indicates a further fall in U.S. shale oil production in the near future. All the same, the excess supply should prevent prices from recovering in the short term. 

In addition, there is correction potential as far as the positioning of speculative financial investors is concerned: money managers significantly increased their net long positions in WTI in the week to 3 November which is bound to have boosted the price rise in the reporting week, says Commerzbank.