February 22, 2017
Hedge funds and managers have been increasing their net long positions (i.e., they’re betting on rising prices) in Brent crude oil to the highest level since records were first started in 2011. Brent crude is the global oil benchmark, and the increases are in response to news that the Organization of the Petroleum Exporting Countries (OPEC) achieved 90% of production cuts agreed to in 2016.
But analysts suggest not rushing to secure long positions just yet. Crude oil stockpiles were at their highest level in the week ended Feb. 17, 2017. “Oil prices continue to be pulled between the contradictory influences of reports of falling OPEC production and rising U.S. crude inventories,” David Martin with J.P. Morgan, told the Wall Street Journal.
Warren Patterson with ING Bank added: “Higher U.S. output, building stocks and the possibility that OPEC continues to fall short of their targeted cuts, could be the perfect catalyst for a speculative sell-off.”
For comments, questions or concerns, please contact Amy Sorter