5.9 C
Saturday, March 2, 2024
HomeInvestors Surge Back Into Oil At Fastest Pace In 5 Years

Investors Surge Back Into Oil At Fastest Pace In 5 Years


Related stories

Is It Time To Ditch Tech Stocks for Gold?

Via SchiffGold.com This week Peter covers the highlights of the last few weeks of volatile trading, paying special attention to Nvidia, Wall Street’s favorite AI stock, and Newmont Corporation, a heavy hitter in the gold mining industry. Both companies...

IRS To Retrieve Potentially Hundreds Of Millions Of Dollars From Americans Who Failed To File Tax Returns

IRS To Retrieve Potentially Hundreds Of Millions Of Dollars From Americans Who Failed To File Tax Returns Authored by Tom Ozimek via The Epoch Times (emphasis ours), The Internal Revenue Service (IRS) building in Washington, on June 28, 20...

US Military Begins Airdropping Food Into Gaza

US Military Begins Airdropping Food Into Gaza With the humanitarian disaster in Gaza growing more desperate each day, President Biden on Friday afternoon announced that the United States government would begin airdropping food and other su...

The Lucas critique cuts both ways

I’m occasionaly asked how NGDP level targeting would have performed in a specific historical case, such as 1981 or 2023. The usual worry is that when NGDP is well above trend, a policy of level targeting might require a highly contractionary monetary policy, triggering a recession. Here it’s worth recalling the Lucas critique (from Wikipedia): […]

In praise of mispronunciation

I recently saw a Wall Street commentator talk about how uniformed investors are piling into Nvidia stock. He mocked some people he overheard at the gym referring to it as “nah-vidia”, instead of the correct “en-vidia”. But I don’t think we should mock people who mispronounce words, as it’s often a sign of intelligence. Consider […]
Investors Surge Back Into Oil At Fastest Pace In 5 Years

By John Kemp, senior market analyst

Portfolio investors have piled back into petroleum futures and options at the fastest rate for more than two years as concerns about a global business cycle downturn have eased.

Hedge funds and other money managers purchased the equivalent of 89 million barrels in the six most important petroleum contracts over the seven days ending on Jan. 17.

Investors Surge Back Into Oil At Fastest Pace In 5 Years

Purchasing was the fastest since November 2020 (shortly before the first successful coronavirus vaccine trials were announced) and before that April 2020 (when the first lockdowns started to be eased). The wave of buying was led by crude (+78 million barrels), especially Brent (+55 million), with smaller buying in NYMEX and ICE WTI (+23 million).

Total Brent positions climbed to 212 million barrels (44th percentile for all weeks since 2013) up from 157 million (22nd percentile) on Jan. 10 and a recent low of just 89 million (4th percentile) on Dec. 13.

Bullish long positions outnumbered bearish short ones in Brent by a ratio of 5.30:1 (63rd percentile) up from 3.07 (28th percentile) on Jan. 10 and 1.95 (6th percentile) on Dec. 13.

The increase in investors’ Brent positions was the largest since August 2018 and the sixth-largest out of 514 weeks since the time series began in 2013.

The sudden turn around seems to have been driven by a combination of low initial positioning and a sudden increase in confidence about the outlook for the global economy and oil consumption. Recent inflation data have shown the rate of price increases is moderating, which has raised hopes for an early peak in the interest rate cycle.

With gas and electricity prices declining in recent weeks, some major forecasters now expect the euro zone as well as the United States to avoid a formal recession in 2023. China also appears to be pressing ahead with re-opening the economy after three years of intermittent and disruptive lockdowns.

Given the speed of transmission, the current infection wave is likely to be completed by the end of February or early March. By April, there is likely to be a very large increase in domestic and international passenger travel by air, rail and road, driving a large increase in fuel consumption.

China’s re-opening industrial economy is also likely to stimulate domestic diesel consumption and spill-over stimulus to other economies in Asia.

Ironically, the biggest risk to the economy and oil consumption is that the economic revival rekindles inflationary pressures and forces the major central banks to persist in raising interest rates longer and higher.

Tyler Durden Tue, 01/24/2023 - 11:24


- Never miss a story with notifications

- Gain full access to our premium content

- Browse free from up to 5 devices at once

Latest stories


Please enter your comment!
Please enter your name here