Oil markets have kicked off the new week on a slightly sour note with leading benchmarks recording minor gains. WTI crude was up 0.37% to trade at $72.94/barrel at 13:19 hrs ET in Monday's session while Brent was down 0.12% to $77.04.
The sideways trading comes a day after negotiators from Democratic and Republican parties reached an agreement to raise the debt limit on Sunday night, days before the government hit its borrowing limit. If Congress approves the new deal, the federal government will have the liberty to borrow money until 2025.
Over the past couple of days, WTI prices have been struggling with the 50-Day EMA; however, optimism about a new debt ceiling deal being reached can lead to prices breaking above and rally to the $75 level, perhaps even as high as $79 where the 200-Day EMA is racing toward. Last week, both benchmarks gained over 1%, marking the second consecutive week of gains. The positive momentum was mainly driven by progress in U.S. debt ceiling discussions as well as a warning from Saudi Arabia's energy minister aimed at short-sellers.
"Speculators, like in any market they are there to stay, I keep advising them that they will be ouching, they did ouch in April, I don't have to show my cards I'm not a poker player... but I would just tell them watch out," Saudi Energy Minister Abdulaziz bin Salman said on Wednesday as quoted by Reuters.
Rampant short-selling has been putting a lot of pressure on the markets. According to commodity experts at Standard Chartered, speculative positioning in crude oil has now returned to its March bearish extreme despite the OPEC+ cuts taking effect in the current month.
Over the past few weeks, there's been a disconnect between what energy economists are seeing in the data and what speculative traders are acting on, with physical markets remaining in relatively decent shape while short sellers continue betting on conditions worsening.
By Alex Kimani for Oilprice.com
More Top Reads From Oilprice.com:
Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. More
Comments
That says to me anyways that diesel engines made in Europe and elsewhere for (Asia) are now in a massive glut as is true of gasoline engines and power trains as both are now being replaced at the consumer level by both pure BEV and military "war machines" which are overwhelmingly in fact exclusively a diesel product.
US demand for now mature hybrid engine and drive systems meanwhile are..