Tags: Speculators | Crude-Oil Wagers | OPEC | Output

Speculators Temper Crude-Oil Wagers Before OPEC Meets on Output

Monday, 01 Jun 2015 02:13 PM

Speculators retreated from both bullish and bearish wagers on crude-oil prices before OPEC ministers meet to determine their output for the next six months.

With bearish bets on West Texas Intermediate falling at a faster pace than bullish holdings, the net-long position rose for the first time in three weeks, U.S. Commodity Futures Trading Commission data for the seven days ended May 26 show. OPEC will keep favoring market share over prices when it meets in Vienna on June 5, according to all but one of 34 analysts and traders surveyed by Bloomberg. Brent crude net-long positions dropped for a third week, exchange data showed Monday.

Saudi Arabia and other members of the Organization of Petroleum Exporting Countries have been pumping above the group’s output target for months, seeking to drive out higher- cost producers. The number of active U.S. rigs dropped by a record, supply from U.S. shale fields is falling and global producers cut billions from spending plans.

“There’s no reason for the Saudis to change policy when it’s just starting to have an impact on the U.S.,” Mike Wittner, head of oil research at Societe Generale SA in New York, said by phone May 29. “They’re going to wait and see what happens to U.S. output before making any changes.”

Futures advanced 77 cents to $58.03 a barrel on the New York Mercantile Exchange in the period covered by the CFTC report. WTI for July delivery dropped 83 cents, or 1.4 percent, to $59.47 a barrel at 12:38 p.m.

Winning Streak

Crude’s 11th consecutive weekly gain was the longest winning streak since futures started trading in 1983. U.S. drillers have reduced the operating rig count for 25 weeks to the lowest level in more than five years, according to Baker Hughes Inc. While U.S. crude stockpiles fell 2.8 million barrels to 479.4 million barrels in the week ended May 22, supplies are still near the highest level since 1930.

“We should shortly start seeing production decline as the drop in the rig count is felt,” Dan Heckman, a senior fixed- income strategist in Kansas City at U.S. Bank Wealth Management, which oversees $126 billion, said by phone May 29. “There was speculation that drilling would increase because of the recent rise in prices, but that’s not occurred.”

The net-long position in WTI rose by 1,074 contracts to 245,127 futures and options. Shorts dropped 6 percent to 64,925 and longs slipped 1 percent to 310,052.

The net-long position in Brent fell to 222,357 contracts, according to ICE Futures Europe. Shorts expanded to 49,633 contracts from 42,903 lots a week earlier while longs fell 4.3 percent to 271,990.

Gasoline Bets

In other markets, net bullish bets on Nymex gasoline declined 1.3 percent to 23,475, the lowest level since the week ended April 14. Futures rose 0.2 percent to $1.9983 a gallon on the exchange in the reporting period.

Net bearish wagers on U.S. ultra low sulfur diesel increased 1.3 percent to 4,734 contracts, the first gain in seven weeks. The fuel slipped 1.5 percent to $1.9002 a gallon.

Net-short wagers on U.S. natural gas rose 32 percent to 28,649. The measure includes an index of four contracts adjusted to futures equivalents. Nymex natural gas fell 4.3 percent to $2.822 per million British thermal units during the report week.

Kuwait is among OPEC members who have said the group will leave output targets unchanged this week. Prices collapsed 46 percent last year as Saudi Arabia led the 12-member group in maintaining production rather than cede market share to booming U.S. supply.

OPEC crude production increased 67,000 barrels to 31.579 million a day in May, according to a Bloomberg survey of oil companies, producers and analysts. Saudi Arabia, OPEC’s top producer, pumped 10.25 million barrels a day in May, unchanged from April and the most in data going back to 1989.

“OPEC isn’t expected to do anything so attention is focused” on the American market, Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by phone. “Supply is expected to gradually tighten in the U.S.”

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Speculators retreated from both bullish and bearish wagers on crude-oil prices before OPEC ministers meet to determine their output for the next six months. With bearish bets on West Texas Intermediate falling at a faster pace than bullish holdings, the net-long position...
Speculators, Crude-Oil Wagers, OPEC, Output
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2015-13-01
Monday, 01 Jun 2015 02:13 PM
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