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Bloomberg

Hedge funds turned less bullish on crude oil as the Organisation of Petroleum Exporting Countries failed to signal it will act to halt the collapse that drove prices to a four-year low.
Money managers reduced net-long positions in West Texas Intermediate by 4.1 per cent in the week to November 18, US Commodity Futures Trading Commission data showed.
Long positions sank to an 18-month low. Outstanding futures contracts dwindled to the lowest level in more than two years.
Opec members will meet in Vienna on Thursday to decide on production after oil plunged 30 per cent since June.
Leading producers, including Saudi Arabia, are resisting calls to reduce output while others such as Venezuela seek action to support prices.
Twenty analysts surveyed last week are perfectly divided, with half predicting a cut and the rest no action.
"Traders tend to pull their horns in in times of uncertainty," said Tom Finlon, a director of Energy Analytics Group. "Opec is overproducing.
"With the outcome of the Opec meeting being unclear, and with generally strong supply circumstances, traders are reducing their positions."
WTI dropped US$3.33, or 4.3 per cent, to US$74.61 a barrel on the New York Mercantile Exchange in the period covered by the CFTC report. It settled at US$74.21 on November 13, the lowest level since September 2010.
Futures gained 1.2 per cent to close at US$76.51 on November 21, after China cut its borrowing costs.
WTI open interest slipped to 1.4 million contracts on November 20, the least since July 2012, according to exchange data.
Opec, responsible for about 40 per cent of global oil output, produced 30.97 million barrels a day last month, exceeding its 30 million target for a fifth month, the data showed.
Global consumption would slip about 1 per cent in the first quarter, the International Energy Agency said.
US output would reach a four-decade high next year as production from shale formations grew, the Energy Information Administration forecast.
"People are taking bullish bets off because they don't know what's going on with Opec," said Tariq Zahir, a commodity fund manager at Tyche Capital Advisors.
Saudi Arabia was committed to seeking a "stable" oil price and speculation of a battle between crude producers "has no basis in reality", Saudi Oil Minister Ali al-Naimi said at a conference in Mexico last month.
"The Saudis are not dissatisfied at this price level," said Michael Lynch, the president of Strategic Energy & Economic Research. "The most likely outcome of the meeting is that they'll call people to obey their quota. I don't think you'll see any serious change in production."
Net longs for WTI declined by 7,439 to 175,051 futures and options combined. Long positions fell 1.3 per cent to 248,217, the lowest since May 14 last year. Short positions increased 6.1 per cent to 73,166, according to the CFTC. Net longs rose in the previous week.
In other markets, bearish wagers on US ultra-low sulphur diesel dropped 19 per cent to 23,565 contracts. The fuel sank 3.5 per cent to US$2.3813 a gallon in the report week.
Bullish bets on petrol climbed 22 per cent to 39,320 contracts, the most since July. Futures slipped 2.9 per cent to US$2.0432 a gallon on Nymex in the reporting period.
Regular petrol prices at the pump averaged US$2.82 on November 22, the least expensive since November 2010, according to AAA.
Net-long wagers on US natural gas increased 6.6 per cent to 94,075 contracts. The measure includes an index of four contracts adjusted to futures equivalents: Nymex natural gas futures, Nymex Henry hub swap futures, Nymex ClearPort Henry hub penultimate swaps and the ICE futures US Henry hub contract. Nymex natural gas was little changed at US$4.244 per million British thermal units during the report week.
Opec last cut quotas in December 2008, trimming its target by 2.46 million barrels a day in response to the financial crash that sent WTI tumbling from a record US$147.27 in July 2008 to US$32.40 by December.
"The big challenge Opec has in terms of making any cuts is to decide first from what basis to make the cuts," said Daniel Yergin, a vice-chairman of global information company IHS said. "It's challenging because Saudi Arabia is concerned to maintain its market share and every country's situation is so different."


Opec division spurs hedge funds to trim bullish bets on WTI crude oil

Leading producers are resisting calls to reduce output while other Opec members are seeking action to support prices. Photo: AP

Business

Commodities

Opec's failure to signal it will act over price collapse fuels uncertainty and prompts traders to trim positions before the oil group's meeting


Hedge funds turned less bullish on crude oil as the Organisation of Petroleum Exporting Countries failed to signal it will act to halt the collapse that drove prices to a four-year low.


Opec division spurs hedge funds to trim bullish bets on WTI crude oil

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Opec's failure to signal it will act over price collapse fuels uncertainty and prompts traders to trim positions before the oil group's meeting

Opec's failure to signal it will act over price collapse fuels uncertainty and prompts traders to trim positions before the oil group's meeting