Speculators added about 61,000 combined short positions in crude oil and Brent in the week ending Jan. 2, according to InterContinental Exchange Inc. data.
Short bets in oil rose as fund managers increased their short positions on oil prices in early 2024 at the fastest pace in years.
Speculators added about 61,000 combined short positions in crude oil and Brent in the week ending January 2, Intercontinental Exchange data showed. This is the largest increase since March 2023 and the second largest since 2017. Oil traders started 2024 on a relatively low base.
Saudi Arabia cut prices for all buyers for February, reflecting market weakness, while Wall Street analysts lowered their price forecasts for the year.
Brent crude futures fell for the first time since 2020 last year amid better-than-expected supplies. Prices may come under further pressure this week with the start of the annual rebalancing of the two largest commodity indices.
Funds tracking the Bloomberg Commodity Index and the S&P GSCI are likely to sell about 27,000 U.S. crude oil futures contracts worth about $2 billion, according to estimates from analysts at Citigroup.
It is noteworthy that Goldman Sachs Bank revised down its estimate of the price of Brent crude in 2024 by $10 per barrel, to $70 to $90. The American company expects Brent crude to recover to a peak of $85 per barrel in June 2024 and an average of $81/80 in 2024/2025, compared to $92 previously.
“Saudi Arabia is unlikely to support the market in 2024,” Goldman Sachs analysts said, adding that they expect a full extension of OPEC+ cuts.
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