Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

OPEC’s Oil Surprise Came as Skeptics Doubted Price Rise

Published 09/12/2019, 15:04
Updated 09/12/2019, 15:56
OPEC’s Oil Surprise Came as Skeptics Doubted Price Rise

OPEC’s Oil Surprise Came as Skeptics Doubted Price Rise

(Bloomberg) -- Oil doubters got a surprise from Saudi Arabia on Friday: a pledge of deeper production cuts that sent futures surging for their best week since June.

Hedge funds didn’t see that coming as they slashed net-bullish wagers on West Texas Intermediate crude by 24% in the days leading up to the OPEC meeting in Vienna, data released Friday show. Futures ended the week 7.3% higher in New York, closing above $59 a barrel for the first time since the aftermath of an attack on Saudi premises in September.

Money managers “didn’t know that this OPEC decision was coming,” Rob Haworth, who helps oversee about $150 billion at U.S. Bank Wealth Management in Seattle, said Friday. “They have yet to price in the OPEC+ decision today.”

After two days of tense talks in Vienna, Saudi Energy Minister Prince Abdulaziz bin Salman promised to take the kingdom’s production down to levels not seen on a sustained basis since 2014, according to data compiled by Bloomberg.

In addition to deeper collective cuts by the OPEC+ alliance led by Saudi Arabia and Russia, the kingdom will continue a voluntary reduction of 400,000 barrels a day below its official target, the prince said.

Money managers’ WTI net-long position, or the difference between bullish and bearish bets, dropped to 150,311 futures and options during the week ended Dec. 3, the U.S. Commodity Futures Trading Commission said Friday. Long-only wagers decreased 12%, while shorts soared 46%.

Meanwhile, investors removed about $95 million last week from the United States Oil Fund (NYSE:USO), the biggest exchange-traded fund tracking crude oil prices. The biggest weekly outflow since July occurred as the price of crude jumped. Investors tend to use the ETF as a speculative trading tool to make bets on short-term price reversals.

(Updates with details on U.S. Oil Fund flows in seventh paragraph.)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.