oil prices

Oil Bulls’ Risky Bet

With OPEC ministers meeting this Friday, 22 June, all eyes will be on Vienna to see how much more supply is likely to come online.

For the past several months, we’ve been telling you that WTI should fall back into the mid US$50 range this northern summer. That’s partly based on OPEC upping production. And partly on record US production not looking to stall anytime soon.

Of course, not everyone agrees.

As Bloomberg reported on Saturday, ‘After two months of cutting bets on rising prices, hedge funds are feeling optimistic again as OPEC prepares to meet.

As you can see in the chart below (if you have really good eyes), net-long position on Brent rose 4.1%.

brent oil

Source: Bloomberg

Oil market volatility ahead?

By next week, we’ll know if the hedge funds were right to be optimistic on rising oil prices. But I wouldn’t invest alongside them.

For one thing, Russia’s economy can use every rouble it can generate. And with the reduced output from Iran and Venezuela, it’s an opportune time for the Russians to pump more…a lot more…without crashing the price.

From Bloomberg:

“The Russians are now pushing for a bigger increase than what we expected earlier, and OPEC is divided now, said John Kilduff, a partner at Again Capital LLC… The Russians are suggesting the 24-nation coalition that began cutting output about 18 months ago lift daily production by 1.5 million barrels, the same amount the International Energy Agency expects to disappear as economic and political crises seize Venezuela and Iran.

Perhaps Vladimir Putin has been reading Trump’s tweets slamming OPEC for artificially boosting the price of oil.

Or perhaps the two leaders have even been colluding…

PS: The global elites could be waging a stealth war on cash even as you read this. This free report reveals more. And three actions you can take today to help safeguard your financial privacy.

Bernd Struben

Bernd Struben

Bernd Struben is the lead editor at The Australian Tribune. Bernd makes use of his extensive network to bring you the top stories you need to know about each day. Stories the mainstream may miss. Or bury somewhere you’re unlikely to ever read them. Bernd studied aerospace engineering and journalism at the University of Michigan, before graduating with a degree in economics. Over the past two decades he’s worked in media, management, and finance in the US, the Caribbean, Europe, and Australia. His other role, as the editor of the Port Phillip Insider, puts him in a unique position to read Australia’s most exclusive financial advice. Some of which he shares with readers of The Australian Tribune for free.
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