Hedge Funds Cut Bullish Bets on U.S. Crude Oil
August 31, 2020
The prices of crude oil and ULSD are trading slightly higher this morning but overall, the market has been in a very small trading range. Generally, the news about damage to refineries is better than expected as Port Arthur was missed and most of the direct hit was to the Lake Charles area. There are several refineries in the area, and some are still assessing damages, but again the markets general sense right now is that things were better than expected.
The market is getting support this morning from two stories. One is the news that Abu Dhabi National Oil Company has told its customers that they will cut supplies by 30% during October. This is an effort to help balance supply and demand and provide price support to crude oil prices. The other news is about the potential to fast track a vaccine which offer the market optimism that thing might return to “normal” sooner rather than later. This optimism is based on comments from the head of the FDA said that he is willing to fast-track a COVID-19 vaccine and approve one before the end of Phase III trials if the benefits outweigh the risks.
The Atlantic stays active as there are two more disturbances that will be watched for possible development.
The Baker Hughes Rig Count has oil rigs down 3 to 180 total rigs. Last year at this time there were 742 oil rigs in operation.
Reuters reported that concerns about rising supplies and the recovering global economy caused hedge funds to cut their bullish bets on US crude oil to the lowest level in almost four months, this is from the data released by CFTC on Friday.