Commodity Focus: Crude Oil
Head of Commodity Strategy
Summary: In today's commodity focus we take a closer look at crude oil which trades unchanged on the day and close to its five-month average ahead of the weekly US storage report at 1430 GMT
WTI crude oil trades close to its five-month average at $55.50/b ahead of the 'Weekly Petroleum Status Report' from the U.S. Energy Information Administration at 1430 GMT. An hour earlier in Europe than normal after the clocks were changed at the weekend. The range bound behavior these past few months highlights the uncertainty in a market where slowing demand growth is being off-set by the potential for additional production cuts from the OPEC+ group of producers.
Despite the struggle to find fresh momentum hedge funds did return as net-buyers of Brent and WTI crude oil for the first time since mid-September last week. However, the skepticism about oil's ability to break higher was highlighted by the gross-short which rose to the highest since January. Overall the combine net-long in WTI and Brent rose by 13k to 302k lots, this following a 52k lots reduction during the previous four weeks.
Focus ahead of today's inventory report has been the potential price supportive drop in crude stocks. This after the American Petroleum Institute (API) last night reported a 1.7 million barrel drop in crude stocks. A drop would be counter to the seasonal trend for this time of year where a slowdown in refinery demand leaves more crude oil unused.