Mexico



Very usefull links



PW
Bookstore





News links

AP

AFP

Aljazeera

Dow Jones

Oil price

Reuters

Bloomberg

Views and News
from
Norway

 

 

 

 

Saudi Arabia and allies will not replace all the Iranian crude -John Kemp

 

 

By John Kemp

LONDON
Petroleumworld 10 02 2018

Hedge fund managers are increasingly betting Saudi Arabia and its allies cannot or will not replace all the crude lost from the market when U.S. sanctions on Iran go into effect fully from November.

Hedge funds and other money managers increased their combined net long position in the six major petroleum contracts by another 50 million barrels in the week to Sept. 25.

Portfolio managers have raised their combined net long position by a total of 196 million barrels over the last five weeks, according to exchange and regulatory data.

Bullish long positions now outnumber bearish short ones by a ratio of more than 12:1, and the imbalance is rapidly closing in on the record 14:1 back in April.

But the new wave of hedge fund bullishness is concentrated almost entirely in Brent rather than WTI or refined fuels ( tmsnrt.rs/2OvBJTE ).

Fund managers have raised their net in Brent by 172 million barrels since Aug. 21 compared with an increase of just 5 million in WTI.

Fund managers now hold a net long position of almost 500 million barrels in Brent betting prices will increase even further from their current four-year high.

Hedge fund long positions outnumber short ones in Brent by more than 19:1, up from a ratio of just 8:1 at the start of August, and closing in on the record 21:1 set in April.

Traders foresee a shortage of seaborne crudes linked to Brent as U.S. sanctions on Iran go into effect on Nov. 4, despite reassurances from Saudi Arabia, Russia and the United States supplies will remain adequate.

Concern about feedstock shortages linked to sanctions explains why position-building has been overwhelmingly concentrated in Brent rather than WTI or refined fuels.

The inland U.S. crude market remains well-supplied and refined fuel markets appear balanced as an international freight slowdown and higher prices take their toll on consumption.

But Brent spot prices have climbed by more than $12 per barrel (17 percent) since mid-August while the six-month calendar spread has risen almost $2.60 and swung from contango into a pronounced backwardation.

Saudi Arabia and Russia have both pledged to increase production to make up for the loss of crude oil exports from Iran. U.S. officials have been working with refiners in Asia to find replacements or Iranian oil.

None of that has assuaged fears about shortfalls in crude availability as sanctions go into effect.

Some analysts question whether Saudi Arabia has enough spare capacity to replace all the barrels lost as a result of sanctions while maintaining enough in reserve to meet any further shortfalls.

Others question whether the kingdom is willing to increase production enough to act as a cap on prices or bring them back down below $80, despite political pressure from the United States.

The enormous concentration of hedge fund long positions in Brent creates a significant risk of a short-term price reversal if and when fund managers attempt to realise some of their profits following the rally.

For the time being, however, with doubts swirling around the outlook for oil supplies, the message from hedge fund managers is simple: show me the barrels.


________________________


Story by John Kemp from Reuters

reuters.com 10 02 2018


We invite all our readers to share with us
their views and comments about this article.
Write to editor@petroleumworld.com

By using this link, you agree to allow PW
to publish your comments on our letters page.

Any question or suggestions,
please write to: editor@petroleumworld.com

Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels

Twitter: @petroleumworld1


November 13 - 15, 2018.

Gubkin University, Moscow
SPE Student Chapter

 

 

 

 

 

 

TOP

Contact: editor@petroleumworld.com,

Editor & Publisher:Elio Ohep/
Contact Email: editor@petroleumworld.com

CopyRight © 1999-2016, Paul Ohep F. - All Rights Reserved. Legal Information

PW in Top 100 Energy Sites

CopyRight©1999-2017, Petroleumworld   / Elio Ohep - All rights reservedThis site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission fromPetroleumworld or the copyright owner of the material.