Summary:
- Both Brent Oil and Oil.WTI are in the red today
- Barkindo makes opening remarks from Vienna
- OPEC meeting to conclude on Wednesday
The biggest event of the week for markets could well come from Vienna where OPEC and non-OPEC producing countries are scheduled to have their 2nd technical meeting. The price of Oil has been enjoying a strong move higher in recent months after a substantial decline was seen following the May meeting despite an extension to the current supply cuts being announced.
Brent dropped 19% peak-to-trough following the last OPEC meeting. It has since rallied 46%. Source: xStation
Both international benchmarks for crude remain near their highest levels in more than 2 years going into the event although there has been some selling seen today. Brent is currently lower by around 0.3% but there has been some larger scale selling in Oil.WTI with the price down by 1.5%.
OPEC secretary General Barkindo has been on the news wires today with some opening remarks form Vienna. He has said that the determination and hard word in oil supply cuts are paying off and the OECD oil stocks fell to 140M barrels above the 5-year average in October.
Long positioning in Brent Oil remains at historically elevated levels. Source: Bloomberg, Saxo Bank
During the past couple of weeks hedge funds have been trimming their bullish bets for Brent from a record high of 543M barrels. The reduction has primarily been driven by longs being reduced with little sign yet of short sellers increasing exposure. However, they remain at elevated levels historically speaking and this could be seen to eave the market vulnerable to a swoon lower should this week’s meeting end in disappointment.
Seasonality effects also could be seen to suggest a further increase in positioning lies ahead. Source: Bloomberg, Saxo Bank