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Oil Bulls Concerned By Russia’s Failure To Cut Production
If record US crude and gasoline inventories (and soaring US production) were not big enough concerns, oil bulls are starting to lose faith (hedge fund shorts at 12-week highs) after lower growth targets in China and concerns over Russia's compliance with a global deal to cut oil output sparked renewed worries over a crude oil supply glut.
Reuters notes that China on Monday lowered its growth target for the year to 6.5 percent, compared with 6.7 percent last year, and also tightened regulatory controls in an effort to tackle pollution. Investors are watching the moves carefully for signs they could dampen demand for oil.
Meanwhile, figures from Russia's energy ministry released last week showed February oil output was unchanged from January at 11.11 million barrels per day (bpd), casting doubt on its moves to rein in output as part of a pact with oil producers last year. Commerzank noted that Russia's production would need to fall by a further 100,000 bpd in March in order to comply with the agreement.
And it appears hedgies are starting to lose faith…
And while prices are rebounding modestly today (as the machines buy the dip again), the recent trend is clear. The China demand, Russia supply concerns outweighed news of escalating violence in North Africa that sparked questions about oil exports from the region and prompted a small price rebound on Friday.
“It's a market where there are no signs of extreme tightness,” said Olivier Jakob, managing director of PetroMatrix. “It makes it hard to get a sustained rally.”
Source: http://silveristhenew.com/2017/03/06/oil-bulls-concerned-by-russias-failure-to-cut-production/
