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Money managers boosted their net bullish bets on Brent Crude by the second-largest amount on record following the surprise announcement from major OPEC+ producers that they would remove more than 1 million barrels per day (bpd) from the market between May and December.
Speculators and traders added as many as 73,000 contracts to the net long position – the difference between bullish and bearish bets – in Brent Crude, the second-highest increase in such bets, per data from ICE Futures Europe cited by Bloomberg.
The biggest-ever jump in net long positions back in 2016 took place after a similar move from OPEC when the cartel announced cuts and the creation of the OPEC+ alliance with Russia and other non-OPEC producers.
The increase in the net long positions in both Brent and the U.S. benchmark WTI was driven not only by fresh longs but also by short covering. Traders were wrong-footed by the latest surprise cuts from OPEC+, which had spent weeks reassuring the markets that the plunge in oil prices, the banking sector turmoil, and the intensified fears of a recession were not reasons to amend the production cuts agreement.
In the middle of March, Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, told Energy Intelligence in an interview that the OPEC+ group would keep its oil production targets unchanged until the end of the year in view of the high level of uncertainty on the global markets and with global economic growth.
“There are those who continue to think that we would adjust the agreement before the end of year. For those I say they need to wait until Friday, Dec. 29, 2023 to demonstrate to them our commitment to the current agreement,” the energy minister of OPEC’s top producer and the world’s largest crude oil exporter told Energy Intelligence.
But the Saudi minister is also famous for a quote from 2020, “I’m going to make sure whoever gambles on this market will be ouching like hell.”
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.