KBC Market Research Desk
KBC Bank
Crude
Despite falling below 62.5 USD/bbl in intraday trading, the oil price eventually settled unchanged yesterday. Market thus largely ignored comments of Saudi Oil minister Naimi who said that the kingdom has pumped around 10 million barrels of oil per day in April; Naimi’s comments have reminded that Saudi’s decision to fight for its market share is still in place.
An interesting piece of data was released by the Intercontinental Exchange yesterday. The Commitment of Traders report showed that money managers’ net position in Brent futures hit an all-time high last week (see the chart below). The “headline” data thus suggest that speculators as a group bet quite heavily on an increase in oil prices.
On the other hand, the difference between a number of traders holding long positions and a number of traders holding short positions in Brent futures was relatively narrow (compared to the past episodes of high net position) which signals that though speculators as a group expect increase in oil prices, they are internally divided in their expectations. Clearly, some of them must have been betting quite heavily on an increase of oil prices. Tomorrow’s EIA data on US crude & products inventories will therefore certainly draw market attention (as well as similar API data released today) and could trigger quite a strong reaction, especially if the stocks figures surprised to the upside and some speculators unwound their long positions.
Chart of the day:
Net money managers’position in Brent futures (ICE) hit an all-time high last week. Report’s history dates back to the beginning of 2011.
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
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