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Worrying Signs In The Oil Markets

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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. Short positions on the rise

(Click to enlarge)

- For the week ending on October 11, the number of short positions on WTI rose to more than 540,000 contracts, the highest since 2007.
- Producers take short positions to sell future production, locking in prices at some point in the future in order to mitigate risk. As the EIA notes, banks can require producers take such positions as a prerequisite for securing a loan.
- Aside from mere speculation, a rising number of short positions can be an indicator that producers are confident that they can make money at the current futures prices.
- But they also are a bearish signal for oil prices, lending weight to the notion that prices will not rally very much in the near-term.

2. Renewables overtake fossil fuels

(Click to enlarge)

- For the first time ever, renewable energy added more electricity capacity across the globe than fossil fuels did. The IEA estimates that in 2015, 153 gigawatts of renewable capacity was installed, about 55 percent of the global total.
- About 500,000 solar panels were installed every single day in 2015, on average.
- The IEA expects renewables to…

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