OPEC+ Production Cuts will push oil prices higher - Apr 11

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dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

OPEC+ Production Cuts will push oil prices higher - Apr 11

Post by dan_s »

From Bloomberg: OPEC+ is winning its war against short-sellers.

The coalition led by Saudi Arabia said that last week’s
shock decision to slash oil production was intended to punish
speculators and deter them from making unwarranted wagers
against crude prices. If that was the rationale, then the latest
data show the group succeeded.

Money managers slashed short-positions in Brent crude by
29,118 contracts in the week to April 4, the sharpest drop since
2020, according to data from ICE Futures Europe. In percentage
terms, last week’s 46% reduction is the biggest in data going
back to 2011.

The Organization of Petroleum Exporting Countries and its
allies pledged more than 1 million barrels a day of cutbacks
starting in May after fears over banking turmoil and faltering
economic growth led to a pile-up of short positions, dragging
crude prices down to $70 a barrel last month.

The market promptly recovered, with futures trading near
$84 a barrel in London on Tuesday. While the move drew criticism
from Washington amid concerns over resurgent inflation, the
higher price levels should help many OPEC+ nations cover
government spending.
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MY TAKES:
> Saudi Arabia will defend the oil price and they definitely want (and need) Brent to go higher.
> OPEC+ could care less what Team Biden wants. Biden's decision not to refill the SPR when WTI dipped below $70 caused Saudi Arabia to push for the production cuts. Saudi Arabia will do what is best for their country. Biden has screwed up a relationship that is very important to our economy and national security.
> This week's IEA "Oil Market Report" should show that demand for oil-based products is going to exceed supply by over 2 million bpd starting in June.
Dan Steffens
Energy Prospectus Group
Cliff_N
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Location: Seabrook, TX
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Re: OPEC+ Production Cuts will push oil prices higher - Apr 11

Post by Cliff_N »

Apparently the Saudi spanking of Money Managers shorting oil has worked: :lol:

Bullish Oil Bets Surge Most Since 2016 After Surprise OPEC+ Cut
ByAlex Longley
April 10, 2023 at 10:21 PM CDT

Speculators ramped up their bullish bets on higher oil prices after OPEC+ jolted markets with a surprise production cut, posting the second-largest increase in net-wagers on record last week.

Net-long positions in Brent crude jumped by more than 73,000 contracts in the week to April 4, according to data from ICE Futures Europe. The only other time a bigger net-inflow occurred was in late-2016, which also followed unexpected output curbs from OPEC that ultimately led to the creation of OPEC+.

“We expect bullish capital flows to continue for the time being as the production cuts will drive storage draws,” Macquarie Group analysts including Vikas Dwivedi wrote in a note.

https://www.bloomberg.com/news/articles/2023-04-11/bullish-oil-bets-surge-most-since-2016-after-surprise-opec-cut?leadSource=uverify%20wall




The jump in net-wagers was driven by a mix of fresh bullish bets and a drop in bearish ones. Outright long positions climbed the most since 2019, while short bets fell the most since 2020, combining to make a large net-change.

The ICE figures followed similar data from the Commodity Futures Trading Commission, which showed net-bullish bets in West Texas Intermediate jumped the most since 2020 last week. The number of speculative traders holding short bets for WTI and Brent also dropped the most since 2020.
Fraser921
Posts: 2955
Joined: Mon Mar 22, 2021 11:48 am

Re: OPEC+ Production Cuts will push oil prices higher - Apr 11

Post by Fraser921 »

They spanked Biden big time. He had a chance to reload the SPR in mid 60's and passed.
No more fist bumps, i assume :roll:
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