Short crude oil supplement

On Monday (October 27), US crude oil prices fell below 80 U.S. dollars, refreshing their 28-month lows. Then the price rebounded, as the short covering helped to reduce the decline caused by earlier Goldman Sachs cut the oil price estimate.

Goldman Sachs said that due to the continuous increase in crude oil production and supply shortages, the Bank lowered its Brent crude oil price forecast for the first quarter of next year from US$100/barrel to US$85 and US crude oil forecast to US$75/barrel.

This caused both Brent and U.S. crude oil to fall. The downtrend triggered a round of short covering and limited the drop in oil prices as market participants bet on falling oil prices settled some of their positions.

In the morning session, the United States announced weaker-than-expected US pending home sales data, dragging down the US dollar index (85.5800, -0.0100, -0.01%), and supporting all the dollar-denominated commodities.

The US crude oil price in December fell to the lowest level of US$79.44 per barrel in June 2012, and then rebounded and fell 0.01 US dollars to US$81.00.

In December, Brent crude oil fell to a low of $84.55 during the session, after which it reduced its decline and ended lower by $0.30 to $85.83 a barrel.

The spread between Brent crude oil and US crude oil narrowed to 4.83 US dollars per barrel.

Tariq Zahir from Tyche Capital Advisors stated: "The main reason why the Brent and U.S. crude oil markets fell today is the report of Goldman Sachs. However, there are some technical oversold in the market, so the price rebound is quite fierce."

The meeting of the Organization of Petroleum Exporting Countries (OPEC) will meet on November 27 to discuss whether to adjust the target of 30 million barrels of crude oil per day in the first half of 2015. To date, only a few OPEC member states have called for a reduction in production.

Shana, the Iranian oil ministry’s news agency, said that a senior Iranian oil official stated that OPEC is unlikely to downgrade oil production targets at the November meeting.

Worries about weak global demand and increasing supply continue to drag on the performance of the oil market.

Germany's October business climate index fell for the sixth consecutive month, hitting a two-year low, indicating that the German economy may experience setbacks in the fourth quarter. The German economic think tank Ifo announced that Germany’s IFO business climate index in October was 103.2, the lowest since December 2012, and also lower than the 104.3 estimated by Reuters survey and the previous value of 104.7.