WTI Crude oil, down 10% from its recent peak, must currently absorb a lot of conflicting news. Venezuela's output is in free fall; the US has asked Saudi Arabia and others to raise production; there's a widening discount to Brent and solid demand growth is starting to be questioned. Some of these developments threaten to break the harmony within Opec as the members prepare to meet on June 22.
Although the price of crude oil only began to weaken a couple of weeks ago, increased selling pressure from funds had emerged since April when President Trump for the first time tweeted about oil and accused Opec of keeping the price inflated. Saudi Arabia and Russia, together with Kuwait and the UAE, are currently working on a plan to turn up the taps, primarily at this stage to meet the involuntary collapse in production from Angola and not least, Venezuela.
Five consecutive weeks of selling became six with last week’s selling being the most aggressive seen so far in this current cycle. The combined long in Brent and WTI crude oil was cut by 101,000 lots to 823,000 lots, the biggest one-week reduction since last August and the lowest exposure since September.