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Nick Cunningham

Nick Cunningham

Nick Cunningham is a freelance writer on oil and gas, renewable energy, climate change, energy policy and geopolitics. He is based in Pittsburgh, PA.

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Have Oil Prices Hit The Sweet Spot?

Oil Drilling Platform

Friday, June 10, 2016

In the latest edition of the Numbers Report, we’ll take a look at some of the most interesting figures put out this week in the energy sector. Each week we’ll dig into some data and provide a bit of explanation on what drives the numbers.

Let’s take a look.

1. Speculators held their breath ahead of OPEC meeting

(Click to enlarge)

- Ahead of the OPEC meeting, speculators backed off trading, pausing to wait out the result. Both long and short positions fell to their lowest levels since January.
- OPEC meetings typically see large speculative movements, as traders position themselves to find a margin and exploit an expected price movement following the result of the group’s decision.
- The calm ahead of the OPEC meeting on June 2 highlights the group’s diminished importance for oil markets, as well as the market consensus that OPEC won’t be able to agree on coordinated action.
- Also, the decline in speculation has occurred at a time of lower oil price volatility (which is not a coincidence). Oil prices have firmed up, scaring away speculative bets.
- "It’s very clear that OPEC is less relevant than U.S. production data," Rob Thummel, a managing director and portfolio manager at Tortoise Capital Advisors LLC, told Bloomberg. "We’re going to trade near $50, plus or minus five bucks, for quite a while.”

2. Rig count bottomed out?

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