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Investors See Upside For Oil, Even As Shale Output Booms

Offshore

Friday May 12, 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. Hedge funds most bearish since pre-OPEC deal

(Click to enlarge)

- Hedge funds and other money managers continued to flee from their bullish bets in the first week of May, just ahead of the sharp selloff on May 4.

- They reduced their net-length exposure by 20 percent, according to the latest CFTC data.

- Oil investors are now at their most bearish position since OPEC announced its deal in late November.

- While that is an incredibly pessimistic makeup, it doesn’t mean that oil prices will fall further. In fact, the liquidation of long bets could open up space for buying up crude futures.

- “We are moving toward a positioning where these money managers are no longer over-invested,” Tim Evans, an analyst at Citi Futures Perspective in New York, told Bloomberg. “This opens up the potential for them to start buying again.”

- So, paradoxically, the recent downturn in oil prices and the gloom from oil traders could sow the seeds of the next rally.

2. Record Arctic drilling

(Click to enlarge)

- Arctic drilling might be dead in the U.S., but the oil industry is set to…




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