KBC Market Research Desk
KBC Bank
Crude
Today in early trading, the oil price extends yesterday’s slide as strengthening US dollar weighs on price. At the time of writing of this note, the front-month contract on Brent is trading below 65 USD/bbl.
Quite an interesting piece of data was released by the CFTC on Friday. A so called Commitment of Traders report showed a relatively sharp decline in net speculative positions in NYMEX WTI futures; a so-called long-to-short ratio, which compares a number of long contracts to a number of short contracts held by money managers, declined by 10% due to both decline in the longs and increase in the shorts. The report again confirmed different views on future evolution of crude prices among speculators as number of entities holding short positions increased markedly and is seen well above its median while, at the same time, number of speculators holding long position remains high as well. As for the ICE CoT data on Brent futures, it painted a similar picture (drop in the l-s ratio was even more pronounced than in case of WTI).This suggests that a recent period of relatively low volatility (in comparison with the first months of the year) may not last long.
Chart of the day:
A speculative long-to-short ratio in WTI futures dropped markedly last week.
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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