Speculative net long positions in Brent rose to record level

  • Commerzbank commoditiesSpeculative net long positions in Brent rose to record level
  • Saudi Arabian oil production also close to record high in April

Oil prices were characterized by high volatility yesterday. A 2% price fall over lunchtime was followed by a rapid recovery. In the end, Brent closed trading unchanged, while WTI actually achieved a daily increase of 1%. The way trading proceeded yesterday shows that price drops are viewed as a good opportunity to buy. Especially those market participants who missed out on last week’s pronounced upswing are doubtless waiting for favourable prices at which to buy into oil. The latest rise in the crude oil price was speculatively driven to a major extent: according to the ICE, net long positions in Brent held by money managers were increased by 27,700 to 265,200 contracts in the week to 14 April, putting them at their highest level since records began in January 2011. As compared with their low at the start of February, speculative net long positions in Brent have more than doubled and have soared by nearly 40% in the past three weeks. Net longs in WTI have even gained by a whopping 70% within the space of three weeks, and currently find themselves at their highest level since last summer. The price rise of recent weeks cannot be explained by fundamental arguments, on the other hand. By its own account, Saudi Arabia for example scaled up its oil output in March to a record 10.3 million barrels per day. The month-on-month production increase of a good 650,000 barrels per day significantly outstrips the anticipated decline in US (shale) oil production. According to Oil Minister al-Naimi, oil production of the biggest OPEC producer is also at close to record level in April.

Oil is chart of the day

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