Oil investors turned bearish at the fastest pace in more than a year as they lost confidence that OPEC will reach a deal with other producers to limit supply at a gathering this week in Algiers.
Money managers increased bets on falling prices by half as the Organization of Petroleum Exporting Countries kept pumping at a record rate before the meeting.
Prices rose as high as US$47.62 a barrel this month as OPEC officials conducted meetings from Vienna to Paris to Moscow in attempts to reach consensus. Oil tumbled on Septemberr 23 after Saudi Arabia was said to dismiss prospects for an output agreement.
“The rhetoric around the meeting is ringing hollow,” said John Kilduff, a partner at Again Capital LLC, a New York hedge fund focused on energy. “What they say and do are completely different since they continue to increase production.”
Money managers increased their short position in West Texas Intermediate crude by 50,558 futures and options during the week ended September 20, according to the Commodity Futures Trading Commission. Bets on rising prices dropped for a fourth week, the longest stretch of declines in 14 months.
More than 800,000 barrels a day of additional crude is pouring into the global market this month as Russian output climbs while Libya and Nigeria restore disrupted supplies, according to their ministry officials. The global oil-market surplus, once projected to wind down this year, will drag into late 2017, the International Energy Agency said.