• 12 hours Getting out of oil .. now
  • 9 hours Too much or doable - $900 Billion Annual Investments Needed In Renewables By 2030
  • 15 hours Surprise! Aramco Scraps International Listing Plans
  • 11 hours U.S. Arrests Iranian Over Alleged $115 Million Sanctions Evasion Scheme Involving Venezuelan Housing Project
  • 19 hours EU Proposes Online Turnover Tax For Big Tech Firms
  • 6 hours Elon Musk’s $2.6 Billion Tesla Challenge
  • 8 hours U.S. Judge To Question Big Oil On Climate Change
  • 11 hours The Facebook/Cambridge Analytica Scandal
  • 17 hours "Rock star of science" - Stephen Hawking, Who unlocked The Secrets Of Space And Time, Dies at 76
  • 18 hours McDonald's Sets Greenhouse Gas Reduction Targets
  • 13 hours Bad seven days for Martin Shkreli
  • 20 hours Step forward or blackmail? DJT: Tariffs On Steel and Aluminum Will Only Come Off If New Fair NAFTA Agreement Is Signed.
  • 1 day 2020 - Electricity From Renewables Will Be Cheaper Than From Most Fossil Fuels?
  • 10 hours Goldman Sachs Expects Tesla to Miss Model 3 Targets Again
  • 12 hours Nuclear Bomb = Nuclear War: Saudi Arabia Will Develop Nuclear Bomb If Iran Does
  • 18 hours Country With Biggest Oil Reserves Biggest Threat to World Economy
Alt Text

EIA Ups Global Oil Production Forecast

The EIA recently updated its…

Alt Text

Hurricane Irma Could Destroy Oil Demand

Goldman Sachs claims that Hurricane…

Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

More Info

Trending Discussions

Fundamentals For Oil Still Bearish, But Sentiment Is Shifting

Fundamentals For Oil Still Bearish, But Sentiment Is Shifting

Oil speculators spent the latter half of 2015 with an incredibly pessimistic view of the trajectory for oil prices. Speculators piled into short positions, pushing net-shorts to multiyear highs.

But speculators are at a bit of a crossroads at this point. With oil down to $30 and below, a growing number of hedge funds and other major investors are starting to wonder whether or not the selloff has gone too far. To be sure, oil markets are still suffering from too much supply, but with so much production around the world unprofitable at today’s prices, a rally will have to come eventually. While there are differing views on where oil goes from here, more and more speculators are starting to take long positions.

Crude prices fell back to $30 at the start of February, erasing some of the gains posted over the past two weeks. Still, the FT reports that speculators have formed a record level of long position for Brent crude, equivalent to 360 million barrels. Related: Oil Majors Prepared To Borrow To Maintain Dividend Payments

There is also a newfound interest in long positions on WTI, despite the fact that short positions remain elevated. Bloomberg reported that the U.S. Oil Fund (USO), an exchange traded fund that tracks the price movements for WTI, saw its largest monthly inflow in January. USO saw $904 million of capital inflows last month, an indication that more and more investors believe that oil has bottomed out. USO has lost 80 percent of its value since crude prices peaked in mid-2014.

(Click to enlarge) 

Part of the reason for the sudden surge in bullishness on oil prices was the rumor that OPEC and Russia would work together on production cuts. That sparked a sharp rally in oil prices. Speculators began liquidating their short positions and going long on oil. For the week ending on January 26, net-long positions spiked by 35 percent, according to CFTC data.

The rally may not be sustained, given the supply overhang that still pervades the market and the low prospects for OPEC-Russia coordination. But the markets are clearly feeling around for a bottom and speculators believe that there is little room left on the downside for oil. That has more putting bets on a rally, heeding Citigroup’s call that oil could be the “trade of the year.”

By Charles Kennedy of Oilprice.com

More Top Reads From Oilprice.com:

Back to homepage

Trending Discussions

Leave a comment
  • James W. on February 03 2016 said:
    "RUMOR" being the key world.
    Brilliant disinformation. SA won't cut for Iran. and vice versa.
    And any cuts backs will be met by US/Canadian shale in a heartbeat.
    So go ahead SA, cut.

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News