Oil bulls return
Oil bulls are venturing back into the market as global conflict sparks concern that supply disruptions will leave buyers scrambling for barrels. Money managers boosted their net-long position in Brent crude by 4.1 per cent after cutting them the most since 2016 a week earlier.
new york — Oil bulls are venturing back into the market as global conflict sparks concern that supply disruptions will leave buyers scrambling for barrels.
Money managers boosted their net-long position — the difference between bets on rising prices and wagers on a decline — in Brent crude by 4.1 per cent after cutting them the most since 2016 a week earlier.
Geopolitical tensions have roiled the crude market, sending Brent prices higher since mid-July as global supplies tighten. US plans to reimpose sanctions on Iran may sharply curtail the nation’s oil exports, stoking concern that Opec won’t have enough spare capacity to meet rising demand. Saudi Arabia, meanwhile, temporarily halted shipments via a key Red Sea shipping lane after it said two tankers were attached by Yemen’s Houthi militia.
“The risk premium for Brent is definitely on right now given the war of words we’ve seen against Iran -- in general, political instability,” said Ashley Petersen, lead oil analyst at Stratas Advisors in New York. “I don’t think markets are expecting that to get any better anytime soon.”
Iran has renewed threats to block the Strait of Hormuz since the US announced its plan to reinstate sanctions and cut shipments from Opec’s third-largest producer to zero from about 2.5 million barrels a day now. US efforts to cut Iran’s oil exports are expected to contribute to global oil price volatility in the short term, according to the In- ternational Energy Agency. And concern persists that there won’t be enough spare Opec capacity to make up for losses from producers like Venezuela.
The Brent net-long position rose to 367,640 contracts, the first gain in three weeks, ICE Futures Europe data show. “It lines up with our call to buy the dip in July,” said Chris Kettenmann, chief energy strategist at Macro Risk Advisors LLC. “We’ve been pretty vocal about adding to length through the July sell-off.”
Goldman Sachs Group Inc said while US policies may weigh on crude prices in the near term, prices are poised to re-test $80 a barrel later this year.