Crude oil at 12-year low

Crude Oil (WTI) is keeping its bearish trend, after posting 12-year lows last Thursday over the widespread concerns regarding the Middle East and China’s economic evolution.

On the NYME (New York Mercantile Exchange), West Texas Intermediate’s (WTI) February future ranged from $32.66 to $34.26 on Friday’s session to settle at $33.61, meaning a fall of $0.10 or a 0.29% loss. Closing the 5th consecutive time with a loss, the US crude futures went down 10% for the whole week. Taking a step back and looking at the bigger picture, front month contracts for WTI’s crude fell over $6 per barrel as a result of OPEC’s (Organization of Petroleum Exporting Countries) decision to maintain the output quantity at the same level in 2016 at its meeting in Vienna last month.

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As new information about the rising conflicts between Saudi Arabia and Iran (two of the biggest oil producers in the world today) starts to gradually reflect the Crude Oil market, the US domestic benchmarks for crude collapsed to their lowest values since 2004 on Thursday’s session.

Turning to China’s market, the SHCOMP (Shanghai Composite Index) closed up about 2% on Friday’s session as a direct result of PBOC’s (People Bank of China) higher daily fix compared to the previous sessions, in an attempt to stabilize the market. The upward hike put a stop to a week-long hindering of China’s equities on behalf of weak data regarding output in the manufacturing and service sectors of the world’s second biggest economy. On Thursday, the index fell 7% generating a trading halt of around a half an hour after triggering a circuit break the second time last week. Also, last week’s massive oil sell-off in China (around 10.5 million barrels per day) exacerbated the fear of a declining demand, the country consuming the largest amount of oil in the world after the US.

Worldwide, Crude Oil prices collapsed over 50% during the course of the last 14 months, since OPEC dynamited the ever-lasting battle for market shares between producers with its decision of maintaining the daily output ratio at 30 million barrels per day. The stratagem produces an oil overflow in the global markets, setting up a glut of excessive production as the supply continues to rise above demand.

The Crude Oil collapse also influenced the USD/CAD pair, pushing Friday’s spot at daily highs of 1.4140. The Canadian dollar stepped back after posting daily gains after the release of December’s labor market figures, according to which Net Change in Employment went up almost 23K versus an expected 10K, with the jobless rate unchanged at 7.1%.