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Oil Markets Are Rebalancing At Last

Barrels

Friday September 15, 2017

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. Whiplash for oil investors

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- As refineries started to go offline amid the historic hurricane that hit Texas at the end of August, hedge funds and other money managers scrambled to short WTI, betting that a huge disruption in refining capacity would lead to a buildup in crude supplies.
- They were right: some 4 mb/d of refining capacity was temporarily idled, although that figure is down to less than 2 mb/d at this point.
- In fact, refineries staged a comeback quicker than expected, leading hedge funds and other major investors to rapidly unwind those short bets, swapping them out for long bets, even as the destruction of Harvey was still being tallied.
- The positioning corresponded with a brief decline and then rebound in WTI prices.
- “You can afford, as a speculative investor, to get a little bit more bullish,” Tamar Essner, an energy analyst at Nasdaq Inc., told Bloomberg. “The storm certainly was bearish for WTI, but not for the long term, so why not make a quick buck?”

2. China to phase out internal combustion engine

(Click to enlarge)

- The…

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