Tag Archive for: oil investors
“Summer may be a few months away but oil investors are already getting their hopes up that American drivers will do their part to rebalance the market.
Hedge funds increased bets on higher West Texas Intermediate crude prices for the first time in six weeks, shrugging off rising U.S. supplies, as the coming driving season is expected to help ease the glut. Their wagers on more expensive gasoline jumped the most since last year, U.S. Commodity Futures Trading Commission data show.
U.S. fuel producers typically boost crude processing at this time of year as they prepare for the summer surge in demand. In a sign that they’ve already started, a government report showed refineries operating at the highest rate in about three months. Foreign refiners are also developing a taste for American barrels. Crude exports rose to a record in February as China displaced Canada as the biggest customer, Census Bureau data showed.
“As refinery utilization picks up, and if crude exports to Asia remain high, crude supplies will start to deplete,” Thomas Finlon, director of Energy Analytics Group LLC in Wellington, Florida, said by telephone. “The market is focused on where the market is heading, not where it’s been, and crude supplies are going to be whittled down.”
Money managers’ WTI net-long position, or the difference between bets on a price increase and wagers on a drop, climbed 9.2 percent in the week ended April 4 after tumbling 41 percent in the prior five weeks, according to the CFTC. Net bullish bets on gasoline climbed 59 percent, the biggest increase since December.
Refining Boost
Gasoline and diesel producers used 90.8 percent of their crude-processing capacity in the week ended March 31, the most since Jan. 6, according to the Energy Information Administration. Meanwhile, gasoline inventories have fallen almost 8 percent since mid-February, to 239.1 million barrels.
“Bigger-than-expected draws in gasoline stocks help explain the big gain in gasoline net length,” Tim Evans, an energy analyst at Citi Futures Perspective in New York, said by phone. “It probably helped boost interest in WTI.”
Oil futures touched an 18-month high on the first day of trading this year as an accord between the Organization of Petroleum Exporting Countries and 11 other producers to cut output for six months came into effect. Six members of OPEC and Oman back extending production curbs beyond June, with Saudi Arabia and Kuwait saying oil stockpiles need to fall to the five-year average.
The outlook for an extension of the accord has also helped renew optimism that prices will rebound, according to Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.
Bears Retreat
“The oil bears were in retreat because OPEC appears to be complying pretty well to the quota and the likelihood that the cuts will be extended,” Lynch said by phone.
The net-long position in WTI rose by 22,415 futures and options to 267,030. Longs advanced 2.3 percent, while shorts retreated 12 percent. WTI rose 5.5 percent to $51.03 a barrel in the report week. The U.S. benchmark crude was trading at $52.59, up 0.7 percent, at 9:47 a.m. London time on Monday.
Gasoline futures increased 5.3 percent to $1.7217 a gallon in the report period. The May contract was trading at $1.7486 on Monday, extending gains from the highest close for front-month prices since August 2015.
“Gasoline is a safe place to hang your hat as summer approaches,” Energy Analytics’ Finlon said. “Crude supplies will fall as utilization ramps up to meet gasoline demand.”
9 de abril de 2017 18:01 GMT-5
Oil investors are playing it safe as OPEC hammers out the details of a deal to trim output.
Money managers reduced bets on falling prices to the lowest since May as oil held above $50 a barrel, prolonging a rally that began when the Organization for Petroleum Exporting Countries announced a deal to cut production to between 32.5 million and 33 million barrels a day. The group plans to finalize the agreement at a meeting in Vienna on Nov. 30.
“The shorts are not laughing off this OPEC deal anymore,” Phil Flynn, a market analyst at Price Futures Group in Chicago, said in a phone interview. “There’s a growing realization that there’s going to be a deal to lock in production. Things will be relatively calm until we get the agreements.”
Saudi Arabia’s Energy Minister Khalid Al-Falih said Oct. 19 that many nations are willing to join OPEC in cutting production. So far, Russia has said it’s considering taking steps to stabilize the market. Alexander Novak, the country’s energy minister, said Sunday that “many scenarios” are being discussed. Venezuelan President Nicolas Maduro, on a tour of oil-producing countries to boost support for the deal, said Oct. 21 he’s in favor of inviting the U.S. to the next OPEC meeting and creating an “alliance” of OPEC and non-OPEC nations.
“This week the market is in a pause after the run-up to $50,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “There’s still a lot of question about what OPEC is actually going to do next month. Absent that, people are waiting for some more direction than we have now.”
In addition to slashing short bets in West Texas Intermediate crude by 21 percent during the week ended Oct. 18, hedge funds also reduced their long positions by 3.2 percent from a two-year high, according to the Commodity Futures Trading Commission. Net longs increased to the highest in two years.
Oil Inventories
WTI slipped 1 percent during the report week to $50.29 a barrel. The U.S. benchmark rose 0.1 percent on Monday to $50.91 as of 9:41 a.m. London time. Prices reached a 15-month high on Oct. 19 after government data showed U.S. crude stockpiles fell to the lowest level since January.
U.S. stockpiles dropped 5.25 million barrels to 468.7 million in the week ended Oct. 14, according to the Energy Information Administration, after reaching 512.1 million in late April.
“$50 will be the floor through the OPEC meeting, barring some spike in the dollar,” Price Futures Group’s Flynn said. “With U.S. inventories falling at a rapid pace, the prospect of a cut or freeze has real consequences.”
In other markets, net-bullish bets on gasoline rose 9.4 percent to 40,085 contracts, the highest since March 2015, as futures climbed 1.5 percent in the report week. Ultra low sulfur diesel net-longs fell 7 percent to 8,439. Futures slipped 1.2 percent.
WTI held above $50 a barrel even as Russia’s energy minister said the country may produce a new oil-output record next year. As OPEC members head into technical meetings Oct. 28-29, investors will be watching for details on country allocations. Iraq should be exempted from cutting production, Oil Minister Jabbar Al-Luaibi said Sunday.
“The market just wants to see the proof in the pudding,” said Carl Larry, director of oil and gas at consultant Frost & Sullivan in Houston. “We got to $50. That’s as good as it’s getting, going into the November election and the actual OPEC meeting.”
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