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Oil Storage Continues to Weigh on Rally

Friday, March 18, 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. Oil prices rise in conjunction with speculative activity

(Click to enlarge)

- A sharp rally in oil prices since the beginning of February has corresponded with a surge in speculative bets on rising oil prices.
- By the end of February, hedge funds and major money managers had the equivalent of 430 million barrels in net-long positions in WTI and Brent.
- But the bullishness tilts much more in favor of Brent rather than WTI. WTI only held 110 million barrels in net-long positions. Contracts for net-long positions on Brent doubled from 157,617 to 320,289 in February.
- The differences are likely a reflection of the record high levels of storage in the U.S., which will act as a near-term drag on WTI.

2. Oil stocks rising around the world

- Oil traders may be gaining confidence in a rebound, but crude oil storage levels should give them pause.
- In the U.S., storage levels continue to rise even though production is declining. For the week ending on March 11, storage levels hit a new record high of 523.2 million barrels.
- The story is similar across the world. In the OECD, storage levels increased…

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