Deal or no deal, oil in­vestors are pre­par­ing for higher prices

Kuwait Times - - BUSINESS -

The chance of an agree­ment to freeze or cut crude out­put when OPEC mem­bers meet next month might ap­pear more dis­tant now Iraq has joined those ask­ing for an ex­emp­tion, but in­vestors are ramp­ing up their bets that oil prices will rally.

The price of oil has this month risen to its high­est so far this year, hav­ing gained more than 10 per­cent in the four weeks since the Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries agreed to cut pro­duc­tion and rein ex­cess global sup­ply. Since the de­ci­sion at a meet­ing in Al­giers on Sept. 28, at which OPEC said it would seek to cut out­put to out­put to a range of 32.5-33.0 mil­lion bar­rels per day, from its cur­rent es­ti­mate of 33.24 mil­lion bpd.

Al­though there are ques­tions hang­ing over how much each coun­try will cut and whether all coun­tries will agree to it, in­vestors have raised their bets in both fu­tures and op­tions at break­neck speed that oil prices will con­tinue to rise. Data from the US Com­mod­ity Fu­tures Trad­ing Com­mis­sion (CFTC) and the In­ter­Con­ti­nen­tal Ex­change shows money man­agers have added to their bets on a ris­ing crude price at the fastest monthly pace on record in Oc­to­ber. Fund man­agers have bought nearly 218,000 lots of crude fu­tures and op­tions con­tracts in Oc­to­ber alone, the largest monthly rise to date, as in­vestors have taken heart from fall­ing stock­piles. “While much of the oil mar­ket paints a pic­ture of a com­mod­ity strug­gling un­der the weight of a huge sur­plus, sta­tis­ti­cal bal­ances sug­gest that con­di­tions have im­proved markedly,” Bar­clays com­modi­ties an­a­lyst Kevin Nor­rish said in a note. — Reuters

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