Speculative positioning in crude oil has returned to its March bearish excessive, regardless of the voluntary output cuts introduced by some OPEC+ members on April 2, analysts at Normal Chartered famous in a brand new report despatched to Rigzone.
Within the report, the analysts highlighted that their crude oil money-manager positioning index, which they stated is predicated on positioning throughout the 4 most important Brent and WTI contracts as a proportion of open curiosity relative to five-year extremes, fell 8.5 factors week on week to -99.6. That is similar to positioning initially of the pandemic in 2020 and following the collapse of SVB, the analysts identified within the report.
“Speculative brief positions have elevated by 123.9 million barrels over the previous 4 weeks, the biggest four-week rise since November 2018, whereas longs have fallen by 107.9 million barrels over the identical interval,” the analysts acknowledged within the report.
“We expect the most recent build-up in brief positions considerably will increase the chance of additional manufacturing cuts when OPEC+ meets on June 4,” they added.
“Saudi Arabia specifically has typically expressed its dedication to not give speculators free rein to power an excessive worth draw back,” they continued.
The analysts outlined within the report that, whereas the elemental outlook embedded within the speculative shorts seems to be significantly extra pessimistic than these of the primary forecast companies or analyst consensus, they suppose “key OPEC ministers may want to react primarily to that excessive top-down view in a bid to halt the latest rush of cash to the short-side”.
Newest EIA Information
The most recent Power Data Administration (EIA) knowledge is unlikely to enhance both market sentiment or OPEC minister sentiment, the Normal Chartered analysts highlighted within the report.
“Our U.S. oil knowledge bull-bear index fell 66.7 week on week to a extremely bearish -49.7 with crude oil inventories rising by 5.65 million barrels in opposition to the five-year common,” the analysts stated within the report.
“The demand indications have been notably weak, with a month-to-date fall for all product classes serving to to drive our demand sub-index down 157.2 week on week to -90.6,” they added.
“There may be extra positioning and weekly knowledge to come back earlier than the OPEC+ assembly which may but change the temper, however we expect the most recent knowledge has elevated momentum in the direction of a defensive minimize,” the analysts continued.
Normal Chartered’s newest report reveals that there have been 30 bearish, 12 bullish, and 10 impartial readings for its U.S. oil knowledge index over the previous yr. A extremely bearish categorization has been seen 11 occasions over the previous yr, in response to the report, which highlighted that the earlier studying was mildly bullish.
Petroleum Balances Concern
In a separate report despatched to Rigzone final week, analysts at Macquarie Financial institution Restricted stated they continue to be barely bullish on direct crude balances over the following few weeks however added that they’re nonetheless involved about international petroleum balances.
“In our view, … [the w/c May 8] worth pullback was pushed by U.S. financial knowledge and the debt ceiling scenario,” the analysts acknowledged within the report.
“We anticipate a fast improve in refining runs to tighten direct crude balances, however the whole petroleum steadiness may soften as demand development slows, particularly in massive OECD nations,” they added.
In that report, Macquarie Financial institution Restricted highlighted that WTI+Brent speculative internet size decreased by 21.6 Ok contracts to 127.5 Ok – with shorts rising by 27.2 Ok, whereas longs elevated 5.6 Ok – and that managed cash internet positioning decreased by 19.4 Ok to 268 Ok – with shorts rising by 32.9 Ok contracts, whereas longs elevated 13.5 Ok.
Brent MM + Different internet brief elevated by 21.2 Ok contracts to – 172.1 Ok – with shorts rising by 16.8 Ok whereas longs decreased 4.4 Ok – and Brent Managed Cash internet size fell by 30.7 Ok contracts to 113.6 Ok – with shorts rising by 27.9 Ok whereas longs fell 2.8 Ok, the report revealed.
Brent dropped from a detailed of $77.44 per barrel on Could 9 to $74.17 per barrel on Could 12, whereas WTI dropped from a detailed of $73.71 per barrel to a detailed of $70.04 per barrel throughout the identical interval. On the time of writing, Brent is buying and selling at $77.55 per barrel and WTI is buying and selling at $73.70 per barrel.
On the final OPEC and non-OPEC Ministerial Assembly, which was held on December 4, 2022, taking part nations determined to carry the following OPEC+ assembly on June 4, a press release posted on OPEC’s web site in December final yr revealed. In April this yr, a separate assertion posted on the OPEC website famous that the following assembly of the Joint Ministerial Monitoring Committee (JMMC) is scheduled for June 4. The earlier JMMC assembly occurred on April 3.
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