Oil Bulls Flee US Market as Glut Looms and Sanctions Risk Wanes
(Bloomberg) -- Bets on rising US oil prices tumbled to a 16-year low as a looming supply surplus sent bulls stampeding from the market.
Net-long positions on West Texas Intermediate fell by 29,562 to 49,264 in the week ended Tuesday, the lowest since 2009, data from the Commodity Futures Trading Commission show. The retreat, which helped drive oil futures near two-month lows this week, comes as forecasts for a supply glut outweigh concerns that sanctions on Russia will curtail global supplies.
“Oil markets have returned to discounting sanction risks, with barrels thus far remaining un-disrupted,” TD Securities strategists wrote in a note. Now, weak fundamentals in the coming months “suggests that the floor for crude prices is still lower should the demand side show any signs of weakness.”
Although US President Donald Trump was meeting with Russian leader Vladimir Putin Friday to discuss an end to the conflict in Ukraine, investors appeared little concerned that the summit would result in further restrictions on the Soviet nation’s crude flows.
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