Saudi oil minister calls for oil supply cooperation
il investors in the ring.
Hedge funds are finding betting on West Texas Intermediate crude more attractive again, with total positioning on the US benchmark increasing to the highest in almost a year. The surge comes as oil prices have held steady above $50 (Dh183) a barrel — a key psychological level — for about two weeks.
“In general, people are more willing to get into oil right now,” said Ashley Petersen, lead oil analyst at Stratas Advisors in New York, in a telephone interview. “Overall there’s been a real belief that the industry has sort of stabilised the boat and is on the upswing.”
Many investors left the oil market after prices crashed three years ago. Then, “it was just a little too hot for some. Risk profiles at different funds just didn’t really encourage taking on crude when there were other better options out there,” Petersen said. Now, she added, “the overall picture is more stable.” While the number of bets overall are on the rise, investors remain cautious on committing too quickly to an increase in the US benchmark, WTI crude. Hedge funds reduced bets on rising WTI prices for a third week, with short-sellers boosting positions by the most since late August.
The oil rig count has declined for three straight weeks, and the world’s two biggest oilfield service companies said North America’s growth engine is slowing, signalling the market may be on the right path.
Yet the rebalancing process aimed at deflating stockpiles and boosting prices is taking a lot longer than what was expected, according to Mark Watkins, a Park City, Utah-based regional investment manager at US Bank Wealth Management.
“We’re in the seventh-inning stretch of a baseball game,” Watkins, who oversees $142 billion in assets, said by telephone. are back
Saudi Oil Minister Khalid Al Falih made a high profile visit to Iraq yesterday, calling for increased economic cooperation and praising existing coordination to boost crude oil prices.
In a speech at the opening of the Baghdad International Exhibition, Falih said cooperation between Iraq and Saudi Arabia contributed to “the improvement and stability we are seeing in the oil market”.
Al Falih is the first Saudi official to make a public speech in Baghdad for several decades. The two countries began taking steps towards détente in 2015 after 25 years of troubled relations starting with the Iraqi invasion of Kuwait in 1990.
Iraq is seeking economic benefits from the thaw with Riyadh while Saudi Arabia hopes closer ties would help rollback Iran’s influence in the region.
“The best example of the importance of cooperation between our two countries is the improvement and stability trend seen in the oil market,” said Al Falih.
Saudi Arabia and Iraq are respectively the biggest and second biggest producers of the Organisation of Petroleum Exporting Countries (Opec). The Iraqi oil ministry said Al Falih and his Iraqi counterpart, Jabar Al Luaibi, agreed to cooperate in implementing decisions by oil exporting countries to curb global supply in order to lift crude prices.
Al Falih called for increased economic cooperation between the two countries at all levels, saying Saudi Arabia is implementing measures to facilitate the flow of goods and services between the two countries.
A Saudi commercial aeroplane, operated by Flynas, arrived in Baghdad on Wednesday for the first time in 27 years. “It’s that seventh inning, but we probably have those extra innings that pop up.”
Investors will be keeping their eyes on the Baker Hughes rig count to see whether or not the recent oil price rise will spur more drilling activity, according to Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.
Bets
Hedge funds reduced their WTI net-long position — the difference between bets on a price increase and wagers on a drop — by 8.2 per cent to 219,077 futures and options in the week ended October 17, the largest reduction since August, the CFTC data showed. Shorts jumped 18 per cent, while longs increased 0.8 per cent. Different levers are moving Brent bets. Tensions between Iraqi forces and Kurdish fighters led the net-bullish position to rise, Lynch said.
The net-long position on Brent crude rose 1.2 per cent to 494,139 contracts, according to data from ICE Futures Europe. Longs increased by 0.2 per cent, while shorts dipped 7.2 per cent to the lowest level in 10 weeks.