ICE Brent and NYMEX WTI opened lower this morning, with prices for both falling over 1% after China policy briefing over the weekend failed to offer new incentives to boost consumption in the country. However, the prospect of escalations in the Middle East conflict has encouraged hedge funds to offload bearish bets in ICE Brent at the fastest pace in nearly eight years.
The latest positioning data shows that a fair amount of speculative buying in ICE Brent occurred over the last week. Speculators added 123,226 lots to the net long position, a fourth consecutive week of long build-up, leaving them with a net long position of 165,008 lots as of last Tuesday. Money managers reduced gross shorts by 47,977 lots to 91,222 lots, the largest weekly decline since December 2016. Meanwhile, gross longs jumped by 75,249 lots over the last week to 256,230 lots. In contrast, for NYMEX WTI, speculators decreased their net long by 3,947 lots over the week to 137,293 lots for the week ending on 8 October 2024.
Iraq’s state oil company SOMO said that the country has slashed oil production by 260k bbls/d to 3.94m bbls/d in September. This is 60k below its OPEC+ oil production quota, as the country tries to better comply with the group’s effort to balance global crude oil markets. Earlier, OPEC+ advised members like Iraq, Kazakhstan and Russia to fully implement output cuts pledged at the start of the year.
Meanwhile, drilling activity in the US recovered over the last week. The latest rig data from Baker Hughes shows that the number of active US oil rigs increased by two over the week to 481, for the first time in four weeks. There are suggestions that the shale drilling trends may be stabilising after declining through most of 2024, buoyed by a rally in oil and gas prices. The total rig count (oil and gas combined) stood at 586 over the reporting week, up from 585 a week earlier. Primary Vision’s frac spread count, which gives an idea of completion activity, also increased by five over the week to 241.
The energy calendar for the week remains quite eventful. OPEC will publish its monthly oil market report tonight, while the IEA will also publish its monthly oil market report tomorrow and its World Energy Outlook the following day. We will also have the usual weekly US inventory reports from the API and the EIA.
Read More: The Commodities Feed: Higher speculative activity in crude oil | articles