3.3 C
London
Sunday, February 5, 2023
HomeInvestors Surge Back Into Oil At Fastest Pace In 5 Years
Array

Investors Surge Back Into Oil At Fastest Pace In 5 Years

Date:

Related stories

Fake Meat Fail: Sales Collapse At Beyond Meat, Impossible Foods As 20% Of Staff Laid Off

Fake Meat Fail: Sales Collapse At Beyond Meat, Impossible Foods As 20% Of Staff Laid Off The fake meat industry appears to be in a death-spiral as sales at plant-based 'meat' companies Impossible Foods and Beyond Meat have imploded. As ...

Update To ‘Sims’ Video Game Features Teen Trans Characters With Chestbinders, Breast Removal Scars

Update To 'Sims' Video Game Features Teen Trans Characters With Chestbinders, Breast Removal Scars Authored by Steve Watson via Summit News, A new update to the popular “Sims” video game, where the player controls communities of simulated...

EU’s Nat Gas Cuts Likely To Spill Into Next Year

Europe is nearing the end of winter with record-high levels of natural gas in storage—news that has been appropriately celebrated in the media. Yet declarations that the crisis is over appear to have been premature. Because even with this record gas in...

A Return To ‘Head-Smacking Craziness’? Hedge Fund Billionaire Singer Warns ‘Bear Market Is Not Over Yet’

A Return To 'Head-Smacking Craziness'? Hedge Fund Billionaire Singer Warns 'Bear Market Is Not Over Yet' "Central bankers think they are the masters of the universe because the world is looking to them (and only them) to deliver continuou...

The Long-Term Negative Effects Of ESG Will Be Catastrophic

The Long-Term Negative Effects Of ESG Will Be Catastrophic Authored by Tom Czitron via The Epoch Times, Environmental, social, and governance (ESG) has been a hotly debated topic over the last few years. The seemingly unquestioned march t...
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

Subscribe

- Never miss a story with notifications

- Gain full access to our premium content

- Browse free from up to 5 devices at once

Latest stories

LEAVE A REPLY

Please enter your comment!
Please enter your name here