Bullish hedge funds catch a break as crude slide halts near $45
HEESU LEE
NEW YORK (Bloomberg) -- Oil rose after the biggest drop in more than two weeks, providing relief to investors who were the most bullish since early July.
Futures advanced as much 1.6% in New York after declining 4.7% on Friday. Hedge funds cut bets on falling oil prices, leaving them the most bullish in two months, data from the Commodity Futures Trading Commission show. Venezuela and Saudi Arabia agreed to restore stability in the oil market, Foreign Minister Delcy Rodriguez said on Twitter over the weekend.
Oil is down more than 25% from this year’s closing peak in June amid a global oversupply that Goldman Sachs Group Inc. predicts may keep prices low for the next 15 years. The Organization of Petroleum Exporting Countries has sustained output amid the glut, producing above the group’s target of 30 MMbopd for a 15th month in August, according to data compiled by Bloomberg.
“Sharp, rapid declines in prices may be less common going forward, but a slow grind lower should be expected,” analysts from Australia & New Zealand Banking Group wrote in a report Monday, cutting price forecasts for next year and 2017 by as much as 30%. “While the surplus is still expected to persist through 2016, we think that more concrete signs that the market is balancing will be required before prices can stage a sustainable recovery.”
Net Longs
West Texas Intermediate for October delivery, which expires Tuesday, was at $45.28/bbl on the New York Mercantile Exchange, up 60 cents, at 3:10 p.m. Seoul time. The contract lost $2.22 to $44.68 on Friday. The volume of all futures traded was about 21% below the 100-day average. The more-active November contract rose 57 cents to $45.59.
Brent for November settlement was 53 cents higher at $48/bbl on the London-based ICE Futures Europe exchange. Front-month prices slid 1.4% last week. The European benchmark crude traded at a premium of $2.42 to WTI for the same month.
Money managers’ net-long position in WTI rose by 14,821 contracts to 147,678 futures and options in the week ended Sept. 15, leaving them the most bullish in two months, according to data from the U.S. Commodity Futures Trading Commission.
Restore Stability
Venezuelan President Nicolas Maduro and Saudi Arabia’s King Salman bin Abdulaziz said they will work together to restore stability in the oil market and strengthen OPEC, said the Latin American nation’s foreign minister, Rodriguez.
Commercial petroleum stockpiles held by Saudi Arabia, the world’s biggest crude exporter, increased to 320 MMbbl, the highest since at least 2002, according to data Sunday on the website of the Riyadh-based Joint Organizations Data Initiative.
The nation pumped 10.564 MMbopd in June, exceeding a previous record in 1980, according to data the kingdom submitted to OPEC. The Middle East producer cut back output by 1.9% in July, the first drop since February, to 10.36 MMbopd, according to the JODI data. Crude exports slipped 1.2% to 7.28 MMbopd after hitting a record 7.9 MMbbl in March.
“Saudi Arabia is sending a signal that it’s willing to continue the price war despite the fact that there’s an oversupply,” Hong Sung Ki, a commodities analyst at Samsung Futures Inc., said by phone from Seoul on Monday. “With Iran expecting to increase output next year, there’s no possibility that Saudi will cut production in the near future.”
Iranian Oil Minister Bijan Namdar Zanganeh has vowed to increase output by 1 MMbopd once international sanctions against the Persian Gulf state over its nuclear program are removed as it seeks to regain market share.
