Short positions to the maximum

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Oil prices climb after drops of last sessions

Oil prices gave a little break to the market after drops of last sessions. Particularly, at this moment (10.30 hours GMT +1), West Texas Intermediate futures change to $29.61, or 0.65 percent higher, while Brent futures undergo a huge rise of 2.56 percent to $29.28 at the London futures exchange.

IEA: global oil markets to drown in oil glut

The International Energy Agency (IEA) said international oil markets are going to drown in oil glut given the return of Iran and the pumping record of countries such as Saudi Arabia and Iraq. The agency said so in its monthly report on oil. In addition, it highlights that the production surplus might be around 1.5 million barrels of oil in the first semester.

WTI leads Brent

Yesterday, US benchmark crude West Texas Intermediate (WTI) closed the session at $28.94 per barrel, while North Sea Brent decreased to $28.55. It’s the fourth session which WTI leads Brent in quotes. At the beginning of today’s session, this differential remains. Distortions in oil market due to the drop in hydrocarbon prices made the differential existing between these light crude oils change in favor of WTI. During the boom of prices, five years ago, the differential reached up to $27 in favor of Brent, when it hit a sale price of $114 per barrel on October 14th, 2011. The same date, WTI was traded at $86.80 per barrel in New York.

Renewed fears on China’s GDP data

Fears on China’s GDP data and the possible incorporation of the Iran’s export quota caused a new drop in international quotes yesterday. WTI fell by 1.63 percent to hit its lowest level since November 05th, 2003. During this year, this commodity shows an accumulated drop of 21.9 percent.

OPEC oil tumbles below $25 for the first time since 2003

OPEC basket price has tumbled below $25 for the first time since 2003 after reaching $24.74 last Friday, 26 cents lower than the previous session, as informed the oil cartel in Vienna. Opec crude oil price showed its fifth bearish week in a row and stands at the lowest level since May 2003. After OPEC ministers evidenced their division and were unable to agree on a common production ceiling, the value of the OPEC crude oil price plunged by 35 percent.

Short positions on Texas oil hit highs

Short positions on West Texas oil grew by 15 percent per week up to January 12, which means the highest level reached since they started to be registered in 2006. In a short position, investors sell a specific future asset (in this case, oil) with the intention to repurchase it at a lower price upon the drop in its price, thus making a profit. On the contrary, long net positions (expecting the opposite, that is, the rise in oil prices) have hit a 5-year low. On January 12th, there were 200,975 shorts in options and futures regarding oil, the highest amount in history, according to the data from the Commodity Futures Trading Commission (CFTC).

Author: Francisco Neri Bonilla

Francisco Neri is an entrepreneur and a proven specialist in operations. With extensive background launching and managing different kinds of businesses he has more than 15 years of experience in delivering integrated marketing, logistics and digital solutions to multinational clients and companies. Francisco has extensive operating experience in different industries including corporate advertising and corporate communications, marketing solutions, specialized publications and high-profile events design and production. Francisco graduated as B.A. in law at UCAB.

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