Summary:
OPEC+ output cuts left oil prices stable; smart money had anticipated the disappointment, as indicated by pre-existing data.
Oil prices held steady on Tuesday after investors were disappointed by voluntary output cuts by OPEC+. Data showed that the result had been somewhat predicted by the so-called smart money.
Hedge funds and other money managers purchased the equivalent of 14 million barrels in the six most important petroleum futures and options contracts over the seven days ending on 28 Nov.
But they remained extremely bearish after selling petroleum in eight of the previous nine weeks. The net position in crude of 229 million barrels was in only the 1st percentile for all weeks since 2013.
Saudi Arabia's energy minister, Prince Abdulaziz bin Salman, told Bloomberg on Monday that OPEC+ oil production cuts can "absolutely" continue past the first quarter if needed.
Meanwhile, investors have finally given up their repeated efforts to become bullish about the outlook for US gas prices, thwarted by continued production growth and the prospect of a warmer-than-average winter.
The gas market remains oversupplied though prices are heading towards their lowest levels since the start of the century once adjusted for inflation. The EIA said last week utilities added a surprise 10 bcf of gas into storage during the week ended 24 Nov.
Natural gas was in freefall after dipping below its support line and the 200 SMA failed to put a floor under the plunge. Any significant rally above $2.60 does not look likely.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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