Baku, Azerbaijan, June 24
By Aygun Badalova - Trend:
Oil markets are under pressure - they were down almost six percent at one stage, Ole Hansen, head of commodity strategy at Saxo Bank told Trend June 24.
He mentioned that the oil market has started to rebalance over the past few months.
“We’ve seen a strong rally in the market. The risk-off in the market generally at the moment and the stronger US dollar is also hurting oil, but as the oil price comes down, that would potentially speed up the rebalancing process because it will reduce the capacity of high cost producers to increase production,” Hansen said.
“I see the support coming in around the $45 area on both WTI and Brent. When we start to move below $46 a barel, I would look for buyers starting to come in,” Hansen said.
He added, that the biggest risk just in the short-term is the fact there is the general amount of risk-off in the market; margin calls are coming left, right and centre.
“That could mean that hedge funds holding what was until recently a record long in oil could potentially be reducing risk even further, and that could put some selling pressure on the market. Overall, look for support to be established down towards $45,” Hansen said.
Oil prices plummeted on June 24, after the UK’s vote to leave the European Union in a nationwide referendum triggered a selloff across markets, the Wall Street Journal reported.
Trading was volatile on Friday, with oil falling by around six percent earlier in the session. Brent was down by around 5.5 percent by the European mid-session at $48.12 a barrel. Its US counterpart, WTI, was down 5.1 percent at $47.54 a barrel.
The UK held a referendum June 23 on whether to leave or to stay in the European Union. Today, it has been announced that majority of the votes are in favor of leaving the bloc.