The Crude Chronicles – Episode 99

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CFTC COT’s latest institutional positioning report shows that oil traders increased their net long position by an additional 1745 contracts, taking the total position to 499,096 contracts. This latest increase occurred amid ongoing negotiations between OPEC + aimed at agreeing on the next phase of easing interim restrictions. Talks lasted two weeks longer than expected due to a rift between Saudi Arabia, which pushed for lower growth, and UAE producers, which demanded more aggressive growth. Talks ended this week with the cartel and non-OPEC countries finally agreeing to a 400k bpd increase while UAE producers will receive higher targets from May 2022. Much Demand Still Seen While crude prices have been lower in recent weeks, the market firmly rebounds this week in response to news of the deal. There were fears that the dispute could lead to a rift where UAE producers are freeing up and flooding the market with raw materials. With this situation now averted, the focus returns to the broader rebound in risk appetite after a volatile late last week and the beginning of this week. Given the huge demand currently present in the oil market, even with the increase in production, there is still a wide margin between current levels and the market strain, which should keep prices short. EIA Reports Unexpected Inventories. the rally this week comes despite the Energy Information Administration reporting an unexpected build of crude inventories. Trade crude levels fell sharply for more than two months ahead of the data this week. The EIA reported that oil inventories grew last week by 2.1 million barrels, in stark contrast to the 4.6 million barrel decline the market was looking for. The data appears behind the API reporting an 806k barrel plus. Despite the growth of major inventories, however, some good news showed that gasoline inventories were lower, reversing the recent trend. at the 65.52 level, which is still valid today. Price has since become higher and is now back above the 69.53 level. MACD is bearish here, however caution is needed, while 69.52 holds, the focus remains further away soon.

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