Oil bewitched, bothered and bewildered to start the week
The mighty, mighty Ella Fitzgerald was born ninety-nine years ago today, and accordingly the crude oil market is looking ‘bewitched, bothered and bewildered‘, being pulled in 17 different directions – flipping from losses to gains and back again. Hark, here are six things to consider in oil markets today:
1) WTI has rallied some 65% in the last couple of months, with the rally in part ignited by the unwinding of a record speculative short positions. The latest CFTC data show that short positions continue to be closed, while speculative long positions are seeing continued interest; longs increased by 4.8% last week, while shorts tumbled by 19%. Hence, we find ourselves at the highest net long position since last May:
The latest ICE data show that financial positioning in Brent is even more bullish, with net longs at a record of 403 million barrels, up 13% last week.
2) Although we have an impending onslaught of earnings and economic data releases, it has thus far been a slow start to the week. The main release of note overnight was been German business sentiment data; it disappointed across the board, for both current conditions and for a forward outlook. New home sales has been the only release of note in the US, and was also disappointing.
The fun ramps up from here, however, as we get durable goods tomorrow, and Federal Reserve interest rate rhetoric (but no interest rate hike) on Wednesday. All the while, we are in full swing for quarterly earnings season, with BP, Total, Exxon and Chevron all announcing results this week. As we said on Friday, brace yourself…
3) A piece from the WSJ this weekend highlights how US oil producers are increasingly hedging their exposure, and at levels they rejected a year ago because they considered them too low. Despite this uptick, US producers have only hedged
About The Author
Matt is a Director of Commodity Research at ClipperData. Matt specializes in extracting key themes from technical and fundamental analysis of the global energy market, and communicating these through daily and weekly deliverables. He also provides oil and natural gas analysis and commentary to national and international media outlets that include CNBC, Fox Business, Russia 24, the Wall Street Journal, MarketWatch, AFP, Bloomberg, Reuters, and the Oil Daily. Prior to joining ClipperData, he worked for eight years at Schneider Electric / Summit Energy as a Global Commodity Analyst, where he also founded and authored the blog, Energy Burrito. He started his career at the Royal Bank of Canada in the UK, spending eight years with the bank. During that time, he managed $55 million in assets as a portfolio manager and financial analyst.