COVID Cases Are Trending Lower
February 16, 2021
The following is from an article by John Kemp a Reuters reporter. Hedge funds purchased more petroleum last week but buying was almost entirely concentrated in WTI crude oil, which suggest it was driven by the prospect of freezing weather temporarily hitting US oil production. Hedge funds and other money managers purchased the equivalent of 33 million barrels in the six most important petroleum-linked futures and options contract in the week to February 9th. But the buying was concentrated in NYMEX and ICE WTI (+30 million barrels) and to a lesser extent European gas oil (+7 million). According to ICE Futures Europe and the US Commodity Fund, managers have increased their bullish positioning for 14 weeks running, by a total of 531 million barrels, the longest and largest increase in bullish positions since the first four month of 2019. The hedge fund community remains bullish even though crude price have increased by more than half in less than three months since the first successful coronavirus vaccines were announce in early November.
The very cold temperatures that have blanketed most of the US have caused electrical outages and that along with very cold temperatures has impacted refineries, as well as, natural gas production. These outages will cause price increased in the futures market, as well as, spot markets. There are reports of rolling black out and a substantial number of people without power. These extreme temperatures have created and energy crisis. Reports indicate that 2.6 million barrel per day of refining capacity have been knocked offline.
Data on COVID-19 cases have trended lower which is good news, more vaccines have been administered and these thing continue to fuel the hope for strong energy demand in the back half of the year.