The optimism that grows in the oil market in recent weeks has led to strong evidence that traders expect a fastest growing press market to go ahead this year.
Oil market participants now expect fixed cuts and OPC agencies on Venezuela and Iran to continue to pull the market by the end of 2019.
The evidence is that the Brent Crude calendar has spread for the second half of this year turned back to arrears of as much as US $ 0.90 per barrel, compared with a contribution of US $ 0.70 at the end of last year, Reuters market analyst notes John Kemp.
A holdinghold is a market situation where previous month prices are trading on a premium compared to future prices – a tighter or unexpected market signal. In the opposite structure-contango-front prices are months lower than prices in the future months, pointing to crude oil stationing and making oil storage for future sales is profitable.
So, the shift to aholdhold – one of the official aims of the OPEC when oil supply restrictions began in 2017 in conjunction with Russia-signs that many oil market participants expect a tighter oil market in the second half of 2019, and as a result, higher oil prices.
The recent Brent Crude calendar-owned arrears fleet was also being helped by returning the position of a bullish hedgerow fund in the near future of Brent, Kemp argues. Portfolio managers usually focus their bets on contracts closer in time due to the higher liquidity. Therefore, returning expert speculators also contributes to the move to the arrears for the contracts further out in time, those for 2019 later.
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Over the past two weeks, the oil market opinion has been increasingly helpful. First, Saudi Arabia stated that it would break in March 500,000 pd more than a share of the cuttings in the OPEC bargain and would result in slash exports further than below 7 million bpd. Then, signs started to appear that the U.S. and China reaches some kind of commercial bargain, and thus could reverse the often-demanded global economic slowdown that could ask for oil demand. Next, the US penalties on Iran and Venezuela restrict the supply, and the uncertainty of the amount of additional crude caps that are removed from both OPEC members is uncertain as Nicolas Maduro excavates to get into force and because there is no no certainty how the US would deal with the output on Iranian oil customers once they expire early in May 2019.
Therefore, the hedgerow fund and other money managers were boosting long-term jobs in Brent from 10 per cent in the week to 12 February, the latest available data, and this is the biggest increase in Comprehensive bets since the end of August 2018, according to exchange data produced by Bloomberg. The bets that Brent Crude prices will fall will be 5.5% in the latest reporting week. This was the first clear signal this year that portfolio managers turned drugs on oil prices. The net position in Brent – the difference between bets will rise and that leakage bets will have increased in previous weeks, but mainly due to the closure of small boards from the end of 2018, rather than refurbishing aid that oil prices would be rally.
In the week to February 5, portfolio managers added long-term jobs on Brent Crude, but also raised short jobs for the first time this year. Although the speculative situation during the week has led to a slight increase in the long-term consolidated net position, the increase in short positions suggests that hedge funds are much more without a decision where oil prices will go ahead.
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In the week to 12 February, however, the overall oil market moods moved away hedge funds adequately, with speculative purchase in the short term Brent contracts accelerating the backhold – the perception that the oil market will be harder in the second half of the year.
Saudi Minister of Energy Saudi Khalid al-Falih said this week he hoped that the market would return to balance by April, repeating that the OPEC leader decides to do whatever he takes to rebalancing supply and demand are "unexpected".
Saudi Arabia and OPEC cuts, sanctions on Venezuela and Iran, and hope that the U.S.-China trade war will be avoided all of which promote the bullish sense of the oil market. Yet, it could increase the oil industry in the US and return fears of slowing down global growth in demand for the economy and oil feeding market once again.
Not by Tsvetana Paraskova for Oilprice.com
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