Financial Traders Increased Betting on Higher Prices of Oil

Published By : 13 Apr 2015 | Published By : QYRESEARCH

The oil prices increased a bit on Monday, enduring from a strong end to the previous week as the financial traders raised bets on higher prices amidst a slowdown in the U.S. drilling, but analysts cautioned that the fundamentals kept on being weak. The Front-month contact on Brent crude futures were doing up business for 13 cents for US$58 per barrel by 06:49 GMT, while the U.S. crude had also risen to 13 cents for around US$51.77. 

The speculators in the U.S. crude futures and options increased net long positions by around 52 million barrels in the week to April 7, 2015, which is their biggest weekly rise since 2011. Even the volumes for US$100 a barrel options have raised by almost 20%. Whilst many traders consider that prices may not drop much further, analysts stated that a big price rally was also not likely. 

ANZ stated in a note that although there are unsure signals of demand enhancing and the rig counts dropped to the lowest level since the year 2010, an continuing global market surplus that is driven by the enlarging U.S. inventories and the Saudi Arabian output to record the high levels, should restrict any potential rally.

The global oil fundamentals have been very strong year-to-date, but they now see signs that the physical markets are being weak. The refining margins, globally, while still being strong, have fallen significantly. With the U.S. runs set to ramp in the nearing future, the global seasonal turnarounds increasing and product demand weakening, they estimate the product constructs and create pressure on global refining margins that should reduce the appetite for the non U.S. crudes, Morgan Stanley stated.
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