The expert spoke about the impact of OPEC report on oil market

© RIA to Novoshepelychi in fotosannette towers. Archival photoThe expert spoke about the impact of OPEC report on oil market© RIA to Novoshepelychi the image Bank

The fall in oil prices on Tuesday happened due to the failure of speculators and hedge funds from long positions on oil futures that was driven by the data in the November report, OPEC, said head of Saxo Bank strategies in the commodities market OLE Hansen.

«The sharp decline in oil prices yesterday looked like capitulation on the part of speculators and funds, which was triggered by OPEC’s report,» said Hansen RIA Novosti. On Tuesday, oil prices fell 7-8% on fears of oversupply and weak demand after the publication of the report of OPEC.

It made OPEC oversupply in the oil market in 2019 in connection with the growth of oil production in countries outside of the cartel. The growth of production in 2018 was increased to 2.31 million barrels a day in 2019, up to 2.23 million barrels per day. While OPEC slightly lowered its forecast for growth in oil demand in the world in 2018 and 2019.

Hansen noted that the pressure on holders of oil futures also have as the deterioration of fundamentals in the oil market and the absence of an agreement by OPEC regarding production cuts at a meeting in Abu Dhabi. «Hedge funds in response capitulated and hastened to get out of long positions, increasing the volume of short positions,» — said the expert.

In his opinion, large banks and trading companies soon will significantly lower its forecasts for the price of oil. «This could potentially increase the pressure in the near future,» says Hansen.

On Sunday in Abu Dhabi hosted a meeting of the Ministerial monitoring Committee of OPEC+. Participants noted the threat of a possible oversupply of oil in 2019 but have not yet began to recommend production cuts, and decided to continue monitoring of the market and to develop a common consensus on actions for the next year in December.