OPEC+ plan turns hedge fund bullish bets on crude oil to 10-year lows (NYSEARCA:USO)

Crude oil futures fell for a third straight week, which began with a sell-off sparked by OPEC+'s decision to reduce 2.2 million barrels per day in voluntary production cuts later this year, gradually leading to some barrels returning to the market later this year.

In an attempt to halt the selling, the Saudi Energy Minister said that OPEC+'s plan to gradually return some barrels to the market could be temporarily halted or reversed.

But the Saudis cut the price of their main Arab Light crude for Asian customers after three consecutive monthly increases, a clear indication of uncertainty in demand.

Oil rebounded on Thursday amid fresh hopes for a US interest rate cut after the European Central Bank cut interest rates for the first time since 2019, but the recovery lost momentum on Friday after a much larger-than-expected increase in US payrolls for May.

A strong jobs report could dampen expectations when the Federal Reserve begins cutting interest rates.

“All other things being equal, lower interest rates are nominally bullish for equity and commodity prices, suggesting that if rate cut timelines continue to be pushed back, interest rate cuts could be nominally bullish,” Schneider Electric’s Robbie Fraser wrote, according to the Verge. This affects future crude oil prices.” Market monitoring.

Also this week, the US reported bearish data for oil, with domestic commercial crude inventories rising by 1.2 million barrels in the week ending May 31, versus expectations for a decline of 1.6 million, while gasoline and distillate inventories rose, raising concerns about the demand outlook. .

The number of active oil rigs in the United States, an early indicator of future production, fell to its lowest level since January 2022, Baker Hughes said on Friday.

Also on Friday, the US Department of Energy announced plans to do so Buy another 6M barrel of oil to replenish the strategic petroleum reserve.

Front-month Nymex crude (CL1:COM) ended July delivery the week -1.9% to $75.53 per barrel, and August Brent crude (CO1:COM) closed as soon as -1.8% For the week, it reached $79.62 per barrel; On Friday, WTI closed flat and Brent fell 0.3%.

Meanwhile, Nymex July natural gas (NG1:COM) jumped this week. +12.8% to $2,918 per million British thermal units, as warmer weather led to higher demand for the energy sector as well as the possibility of lower excess inventory.

ETFs: (NYSEARCA:use), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (NRGU), (USOI), (UNG), (BOIL), (COLD), (UNL), (FCG)

Hedge funds abandoned their bullish bets Brent crude oil and selling intensified this week, sending positions to their lowest bullish level in nearly a decade, following the OPEC+ decision, Bloomberg reported.

Money managers' net long positions on Brent crude contracted by 102,075 contracts to a total of 45,678 contracts in data through Tuesday, the lowest level of net long positions since September 2014, according to weekly ICE Futures Europe data.

OPEC+ ministers tried to reassure the markets that their plan was subject to adjustments depending on market conditions, which helped oil reduce its losses for the week and perhaps reverse the positions of money managers in next week’s data.

Energy sector, as referred to by the Energy SPDR ETF (Energy Sector Select)NYSEARCA:XLE), was one of the two worst performers of the week, -3.2%.

Top 5 gainers in energy and natural resources over the past 5 days: Flotek Industries (FTK) +16.6%Westport Fuel Systems (WPRT) +15.7%Node of external partners (KNOP) +12.7%OSESCO Development (ODV) +8.9%next decade (next) +8.8%.

Top 10 Declines in Energy and Natural Resources in the Past 5 Days: ASP Isotopes (ASPI) -21.5%Fortuna Silver Mines (FSM) -20.3%Ivanhoe Electric (IE) -19.9%Primary Energy (EU) -15.2%Energy Fuel (UUUU) -15.1%Uranium Energy (UEC) -14.3%Vistra Energy (VST) -14.1%Taseko Mines (TGB) -14.1%ypf (ypf) -13.7%Gas Transport in Sur (TGS) -13.7%.

Source: Barchart.com