Why Are Traders Concerned Of $25/Barrel Oil Next Week?

WTI oil prices have started out 2016 by dropping to nearly $30/bbl, their lowest level since 2003. Unfortunately for oil bulls, a number of analysts now see a real possibility that WTI could drop into the mid-$20s in coming weeks over concerns about global storage capacity as the market continues to work through a massive crude oil supply glut.

Physical oil traders tell Benzinga on Friday that there has been a major uptick in client fear, as many in the physical oil market are worried that a weekly close under $30 would pave the way for more selling next week, driving prices down another 16 percent to the $25 level.

A source who wishes to remain anonymous told Benzinga, ”I have not seen anything like this, not even in 2008.”
 

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While the fear during the 2008 selloff is hard to quantify, one this is certain: prices didn’t fall below $33.55 even during the worst of the 2008 panic selling.

The United States Oil Fund LP (ETF) (NYSE: USO) is down 19.6 percent already in 2016.

Disclosure: the author holds no position in the stocks mentioned.