OPEC’s production could continue to rise in 2016 if sanctions on Iran are lifted, which would allow the country to raise exports.
“We’re in a tug-of-war between a heavily shorted market and a glut of oil in the U.S. and globally, as Saudi Arabia continues to produce oil at elevated levels to maintain market share,” Chris Jarvis at Caprock Risk Management, told Reuters.
Additionally, the markets anticipate the Federal Reserve will announce rate hikes next week, which would strengthen the U.S. dollar and weigh on commodities. [Fed Fans Flame on Inverse Commodity ETFs]
“Couple this with a strengthening dollar as the market anticipates a U.S. rate hike this month, oil is heading lower with a near term target of $32 for WTI,” Jarvis added.
For more information on the crude oil market, visit our oil category.
Max Chen contributed to this article.