Crude prices rallied on Monday as OPEC members gathered in Algiers to start discussing possible joint moves to prop up the market, but investors are increasingly bearish, and last week, bets on lower oil prices reached the highest weekly number on record.
At the time of writing, WTI Crude traded up 2.79 percent to US$45.72 and Brent Crude was up 2.79 percent at US$47.17.
According to data by the U.S. Commodities Futures Trading Commission analyzed by The Wall Street Journal, money managers increased bearish bets by 50,558 in the week September 13-20, the highest weekly level since the commission started keeping records on the data. At the same time, the number of net-long positions dropped by 28 percent 147,467, their lowest level in a month and a half.
OPEC members are finally meeting on the sidelines of the International Energy Forum - which is taking place in Algeria September 26-28 - following nearly two months of speculation, and OPEC and non-OPEC heavyweights are dropping hints and statements about whether they would participate or agree to talks or production caps.
On the eve of the meeting, Reuters reported on Friday that Saudi Arabia was ready to reduce its crude oil output if Iran agrees to freeze its own at current levels. Iran, on the other hand, is currently pumping 3.6 million barrels and has already made it clear that it would only stop increasing its output if the Saudis agree to cut theirs, with the argument that such a move on Iran’s part would be meaningless, if “other countries” continued pumping crude at record levels.
While these two regional OPEC rivals are hinging their possible respective output cuts on the reciprocal commitment of the other, Russia is reportedly ready to join the output-freeze-talks party only after OPEC members agree on the terms of the deal amongst themselves first, according to Bloomberg sources.
This means that potential talks may drag on beyond the Algiers meeting. At any rate, investors and analysts are not holding onto hopes that there will be any freeze this week.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
- The Start Of Something Big? Iran Changes Oil Contracts
- A Freeze Won’t Do – OPEC Needs To Cut Production
- What If The Oil Rebound Never Happens?
