Calendar An icon of a desk calendar. Cancel An icon of a circle with a diagonal line across. Caret An icon of a block arrow pointing to the right. Email An icon of a paper envelope. Facebook An icon of the Facebook "f" mark. Google An icon of the Google "G" mark. Linked In An icon of the Linked In "in" mark. Logout An icon representing logout. Profile An icon that resembles human head and shoulders. Telephone An icon of a traditional telephone receiver. Tick An icon of a tick mark. Is Public An icon of a human eye and eyelashes. Is Not Public An icon of a human eye and eyelashes with a diagonal line through it. Pause Icon A two-lined pause icon for stopping interactions. Quote Mark A opening quote mark. Quote Mark A closing quote mark. Arrow An icon of an arrow. Folder An icon of a paper folder. Breaking An icon of an exclamation mark on a circular background. Camera An icon of a digital camera. Caret An icon of a caret arrow. Clock An icon of a clock face. Close An icon of the an X shape. Close Icon An icon used to represent where to interact to collapse or dismiss a component Comment An icon of a speech bubble. Comments An icon of a speech bubble, denoting user comments. Ellipsis An icon of 3 horizontal dots. Envelope An icon of a paper envelope. Facebook An icon of a facebook f logo. Camera An icon of a digital camera. Home An icon of a house. Instagram An icon of the Instagram logo. LinkedIn An icon of the LinkedIn logo. Magnifying Glass An icon of a magnifying glass. Search Icon A magnifying glass icon that is used to represent the function of searching. Menu An icon of 3 horizontal lines. Hamburger Menu Icon An icon used to represent a collapsed menu. Next An icon of an arrow pointing to the right. Notice An explanation mark centred inside a circle. Previous An icon of an arrow pointing to the left. Rating An icon of a star. Tag An icon of a tag. Twitter An icon of the Twitter logo. Video Camera An icon of a video camera shape. Speech Bubble Icon A icon displaying a speech bubble WhatsApp An icon of the WhatsApp logo. Information An icon of an information logo. Plus A mathematical 'plus' symbol. Duration An icon indicating Time. Success Tick An icon of a green tick. Success Tick Timeout An icon of a greyed out success tick. Loading Spinner An icon of a loading spinner.

Oil speculators make ’easy’ bearish call at 85-year supply high

Industry news
Industry news

Hedge funds placed the most bets on falling oil prices since July as rising piles of crude dashed hopes of a near-term recovery.

Money managers’ short position in West Texas Intermediate crude jumped by 18 percent in the week ended Oct. 20, the largest surge since July 21, according to data from the Commodity Futures Trading Commission. That pulled their net-long position down by more than 16,000 contracts of futures and options.

Crude stockpiles in the US rose 22.6 million barrels in the past four weeks to the highest October level since 1930, even as producers have idled more than half their drilling rigs in the past year. A global surplus of crude could last through 2016, according to the International Energy Agency.

“The decline in US drilling and production is not enough to rebalance even the US market, let alone the global market,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “How much do you really want to pay for the next million barrels of inventory you don’t need?”

WTI fell 2.4 percent in the report week to $45.55 a barrel on the New York Mercantile Exchange. The front-month contract added 0.5 percent to $44.82 a barrel at 8:35 a.m. London time on Monday.

Oil inventories in the US have risen 5 percent in the past four weeks to 477 million barrels, the highest seasonal in 85 years, when massive production in east Texas caused the state to empower its Railroad Commission to regulate output.

Supplies have risen as refineries have slowed processing to perform seasonal maintenance. US plants ran at 86.4 percent of capacity last week, compared with 96.1 percent at the end of July.

“We’re in the middle of refinery maintenance season. Utilization is low, imports are up, and we’re building crude,” said David Pursell, a managing director at investment bank Tudor Pickering Holt & Co. in Houston, said in a phone interview. “The middle of October is an easy time to be bearish on crude.”

The net-long position in WTI fell by 8.7 percent to 168,201 futures and options, just the second decline in the past nine weeks, CFTC data show. Shorts rose by 16,496 contracts, while longs increased by 380.

In other markets, net bullish bets on Nymex gasoline decreased 24 percent to 12,939. Futures fell 2.7 percent in the period covered by the CFTC report to $1.2783 a gallon. Net bearish wagers on US ultra low sulfur diesel climbed 11 percent to 32,179 contracts. Diesel futures dropped 1.5 percent in the period to $1.4487 a gallon.

With the crude market almost 500 days past its pre-crash peak in June 2014, the relative price of crude now is lower than at the same time following collapses in 2008 and 1986, according to data compiled by Bloomberg.

The market is “in the midst of what may well turn out to be the most severe downturn in several decades,” Schlumberger Ltd. Chief Executive Officer Paal Kibsgaard told analysts in a conference call Oct. 16.

Recommended for you

More from Energy Voice

Latest Posts