Rising global crude supplies and weaker-than-expected demand have made traders increasingly bearish on oil prices.
Hedge funds and other asset managers accelerated selling of the most-traded oil futures contracts in the latest reporting week that ended Sept. 3. Portfolio managers cut their overall net long positions — the difference between bullish and bearish bets — to the lowest level since 2011, when exchanges began compiling such data.
The positioning of crude oil is already Leaning towards the bearish This comes as traders reported in the previous week, ending Aug. 27, had cut their bullish bets by more than half since early July.
The week to September 3rd saw further selling and market sell-off, with oil prices dropping to their lowest levels so far this year. Market sentiment was weighed down by the prospect of Libya resuming oil exports, which had been halted due to political conflict, as well as continued weakness in Chinese data and weakening economic growth prospects.
As a result, the combined net long position in the two crude oil benchmarks, Brent and WTI, fell by 99,889 lots to just 139,242 lots in the week ended Sept. 3, data cited by the exchange showed. BloombergThis was the lowest bullish position in ICE Futures Europe and CFTC data since ICE began collecting the data in March 2011.
US Benchmark Net Long Positions WTI Crude Oil It decreased by 62,000 lots to 125,000 lots. Brent Crude Oil In the week ending September 3rd, that figure had nearly halved to around 42,000 lots.
“Including the three fuel products, net longs fell to 121,000 contracts, the lowest energy exposure since ICE began collecting the data in 2011,” said Ole Hansen, head of commodity strategy at Saxo Bank. said.
Concerns about economic slowdowns in China and the United States continued to drive speculators and hedge funds, as did fears of a supply glut due to increased OPEC+ production.
After the end of the reporting week ending September 3, the OPEC+ group I decided to postpone The company plans to increase production for two months from October to December.
However, this did little to reverse the bearish market sentiment. The price has fallen Following last weekend's announcement.
Demand concerns outweighed the alliance's decision to postpone adding 180,000 barrels per day to its supplies.
Last week, WTI crude oil posted its worst weekly performance since October 2023, dropping 8% for the week. On Friday, WTI and Brent closed at their lowest prices since June 2023 at $67.67 and $71.06 per barrel, respectively.
Stocks rebounded 1% from last week's sell-off early Monday, after forecasts of weather in the Gulf of Mexico that could become a hurricane.
But the rebound early on Monday was overshadowed by concerns about the US and Chinese economies.
Friday's US jobs report was weak; Jobs created The weaker-than-expected reading rekindled fears of a recession, but the data paves the way for a rate cut by the Fed next week.
Faster economic growth could lead to higher oil demand as interest rates are cut.
However, Chinese economic data continues to drag down commodity prices.
Major Wall Street banks such as Goldman Sachs, JP Morgan, Citi and Bank of America have already Forecast revised downwards China's GDP growth rate this year is expected to fall short of its official target of “about 5 percent.”
Bank of America is one of the latest banks to cut its forecast from 5 percent to 4.8 percent. say “We believe that the stance of both fiscal and monetary policy is not as accommodative as desired and will be insufficient to revive domestic demand growth,” he said earlier this month.
Improving Chinese demand will be crucial in reversing the current extremely bearish sentiment towards oil, as will a recovery in the US economy following the expected Fed rate cut.
By Tsvetana Paraskova, Oilprice.com
