Oil CEOs' Grim Outlook Rubs Off on Speculators Fleeing Market

“We’re hearing less talk about prices being unsustainably low and somewhat more talk about prices being lower for longer,” Tim Evans, an energy analyst at Citi Futures Perspective in New York, said by phone July 31. “That’s a more realistic expectation.”

Ample Supplies

U.S. crude supplies are 95 million barrels above the five- year average, according to the Energy Information Administration. Inventories in Cushing, Oklahoma, the delivery point for U.S. futures, are at a record high for the end of July.

Drillers have halted their record retreat from oil fields, increasing the number of active oil rigs by 5 to 664 last week, Baker Hughes data show. Even with less than half as many rigs in the field as last year, oil production has climbed as companies have focused on richer fields and more efficient drilling methods.

“Costs are lower this year by about 20%, so that a break- even cost of $60 in 2014 is now in the upper $40s per barrel for WTI,” James Burkhard, a vice president at Englewood, Colorado- based energy consultant IHS, said in a report July 31.

The net-long position for managed money in WTI fell by 7,450 contracts to 98,933 futures and options, the smallest since September 2010. Long positions rose 3 percent while short holdings jumped 11 percent to the highest level since March.

Other Markets

In other markets, net bullish bets on Nymex gasoline contracted 22 percent to 13,604. Futures fell 6.1 percent to $1.8032 a gallon. Net-short wagers on U.S. ultra low sulfur diesel decreased 3.1 percent to 20,068 contracts. The fuel slipped 4.4 percent to $1.6044 a gallon.

Output from the Organization of Petroleum Exporting Countries in July was up 6.5 percent from a year ago. Oil exports from southern Iraq rose to a record 3.064 million barrels a day in July, Thaer Yassin, spokesman of the state- owned South Oil Co., said last week.


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