The Saudis have ramped up production above 10 million bpd for the past few months. Saudi Arabia told OPEC that its June production of 10.564 million bpd was a record, exceeding a previous all-time high set in 1980. Bloomberg reported that Saudi Arabia’s commercial petroleum stockpiles increased to 320 million barrels, the highest since at least 2002, from 319.5 million barrels in June, according to data on the Riyadh-based Joint Organisations Data Initiative's website in late September.
As of October 27, there are 500,513 long positions of non-commercial contracts of light sweet crude oil futures, traded on the New York Mercantile Exchange by hedge funds and dealers, an increase of 16,168 long positions from last week, according to the Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) each Friday.
This is compared to about 406,961 short positions, an increase of 18,843 short positions from last week where light sweet crude oil contracts are traded in units of 1,000 barrels. Hedge funds and dealers have slightly increased their net short positions by about 2,675 contracts, as traders believed there would be a further decline in the crude oil price.
Technically, the crude oil price has been moving in a bearish downtrend since June. The crude oil price was unable to break out the 100-day SMA and fell back to the support level at $44.33 a barrel, or the 50% Fibonacci retracement. A bearish head and shoulders chart pattern has emerged.
The increased probability of a Fed rate hike would put selling pressure on the crude oil price, in addition to the global oil glut. The federal funds futures, traded on the Chicago Mercantile Exchange and commonly used to estimate the market’s views on the likelihood of changes in U.S. monetary policy, indicate 69.8% odds for a half-point rate hike at the Fed's December FOMC meeting, according to data from the CME Group as of November 6.
There are technical supports at around $42.78 per barrel, or the 61.8% Fibonacci retracement level, and the $42.50 per barrel trendline resistance of the symmetrical triangle (SYM TRI), respectively. A strengthening U.S. dollar could send the WTI crude price back to retest the August low of $37.75 per barrel, or the early-2009 low of $33.55 per barrel.