IEA sees the risk that US crude oil stocks could reach the capacity limit

• IEA sees the risk that US crude oil stocks could reach the capacity limit, WTI falls to 6-year low
• US oil rig count fell further, but US oil production still shows no sign of weakness

Something we have warned about repeatedly in recent weeks has now come to pass. Oil prices have shed their February gains again – largely in the case of Brent and completely in the case of WTI, both oil types recording weekly losses of around 9% each last week. Prices remain under pressure as the new week of trading begins. Brent has dropped below $54 per barrel, its lowest level since the beginning of February. WTI has even hit a new six-year low of $43.6 per barrel. Selling pressure was generated on Friday by the International Energy Agency, which warned that storage capacities could soon be exhausted in the US. The reason cited by the IEA was the massive oversupply, which stems first and foremost from the still rising US oil production. The IEA only expects the situation to improve in the second half of 2015 when growth in US oil production looks set to slow. The oil rig count in the US fell by a further 56 last week, according to Baker Hughes, meaning that it has declined by a good 40% since the start of the year. So far, however, US oil production has shown no signs of faltering – and in early March actually achieved a 42-year high of just shy of 9.4 million barrels per day. We see further downside potential for oil prices because financial investors are now also likely to sell. Their purchases had played a major role in the February price surge. Speculative net long positions in WTI have already plunged by 23% in the past three weeks. This has yet to happen in the case of Brent. The ICE will be publishing new positioning data for Brent at lunchtime today.