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Crude oil prices continued their climb on November 20 with gains of over 2% heading into the next OPEC+ meeting on November 26, where the expanded cartel is expected to further bolster voluntary output cuts.
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At 10:50 a.m. ET on Monday, Brent crude was trading at $82.54, up 2.39%, for a $1.93 gain on the day. West Texas Intermediate (WTI) was trading up 2.17% at $77.54, for a $1.65 gain on the day. The jump in oil prices started on Friday, after four weeks of declining prices saw fundamentals overtake the war-risk premium prices had enjoyed in the aftermath of the Hamas attack on Israel on October 7.
Goldman Sachs said earlier on Monday that it wasn’t ruling out deeper OPEC+ production cuts “given the fall in speculative positioning and in time spreads, and higher-than-expected inventories.
Likewise, ING cautioned that the “oil balance for the remainder of this year is not as tight as initially expected”, referring to higher supply and predicting a surplus in the first quarter of next year.
According to Reuters, hedge funds and major money managers have cut their positions in petroleum by 338 million barrels since September 19, led by sales in crude oil last week of 16 million barrels. As of November 14, Reuters aid funds held a net position of only 78 million barrels of NYMEX and ICE WTI–a low not seen since 2013.
At the same time, Reuters noted that the market has become “lopsided” due to a rising rate of short positions, which could lead to a reversal that may be manifesting itself now.
According to Bloomberg, hedge funds have reduced the oil bets to the point that they are more bearish than they have been in 20 weeks. All of this is leading to predictions that OPEC+ will attempt in the least to maintain existing cuts, if not broaden those cuts.
“We’re retracing some of the losses last week on ideas the selloff by fund liquidation was probably over-exaggerated,” Bloomberg quoted BOK Financial Securities VP Dennis Kissler as saying on Monday.
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