OPEC deal extension isn’t enough to rope in crude-oil bulls - Report
Bloomberg reported that the good news from OPEC wasn’t good enough. Hedge funds trimmed bets on rising crude prices to the lowest level since November as oil futures dipped below USD 50 a barrel amid skepticism an OPEC-led campaign to cut output will soon curb a worldwide supply glut. Speculators also fled bearish positions for a second week.
During the reporting period, the Organization of Petroleum Exporting Countries and its partners extended their existing cuts by nine months. Traders rooting for deeper or longer curbs were disappointed, and prices suffered their steepest weekly decline in a month.
Mr Mike Wittner, head of commodities research at Societe Generale SA in New York, said that “The market wants to see it before it believes it.”
According to US Commodity Futures Trading Commission data, Money managers shaved short positions in West Texas Intermediate futures and options by 13 percent and long positions by 0.9 percent in the week ended May 30. Hedge funds increased their WTI net-long position, or the difference between bets on a price increase and wagers on a drop, to 206,103 contracts.
Crude futures, trading around USD 48 a barrel on Monday, dropped by 4.3 percent last week, the most since May 5. They may dip as low as USD 45 before spurring new buying, said Mr Bill O’Grady, chief market strategist at Confluence Investment Management in Webster Groves, Missouri.
According to Rystad Energy, a Norway-based industry consulting firm, the decline comes as U.S. shale producers are on pace to lift output to 10 million barrels a day by the end of this year. That’s a level not seen in almost half a century.
Source : Bloomberg