Oil futures and related exchange traded funds are losing energy, with speculators turning less bullish on the commodity, as the U.S. shale oil boom bolsters stockpiles and concerns on a weakening global economy deepen.
The United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate oil futures, has declined 4% since the mid-April high and is now testing its 200-day simple moving average. USO, though, is still up 2.8% year-to-date.
WTI crude oil futures dipped 0.4% Monday and is trading back below $100 per barrel for the first time in almost a month.
Money managers cut net-long positions in WTI oil by 0.9% in the seven days ended April 29, a second weekly decline, as short positions climb to their highest in a month, reports Mark Shenk for Bloomberg.
WTI oil is under pressure as crude inventories increased to 399.4 million barrels in the week through April 25, the most since the Energy Information Administration began reporting data in 1982, as U.S. output hit a 26-year high in April on horizontal and hydraulic fracturing techniques in shale formations.
“The recent pullback in prices makes sense and I expect it to continue,” Stephen Schork, the president of Schork Group Inc., said in the article. “WTI will probably be trading in the low-to-mid $90s area soon.”
Meanwhile, the United States Brent Oil Fund (NYSEArca: BNO), which tracks Brent crude, has declined 2.6% since late April. BNO has declined 2.6% year-to-date.