In the aftermath of Trump victory and as an OPEC 'deal' decision looms, hedge funds, oil producers, and consumers have placed the largest number of bets on WTI's next move since August 2007.
Producers and merchants increased short positions, or protection against lower WTI prices, to the highest level since March 2011. They added 66,613 bearish contracts over the past two weeks as prices retreated from last month’s peak at above $50 a barrel. Money managers’ net-long position in WTI advanced for the first time since mid-October, climbing by 3,906 futures and options to 163,321. Shorts climbed 14 percent while longs rose 8.1 percent.
While WTI is exuberantly rising this morning on the heels of Putin's positive 'deal' comments...
We note that Oil VIX costs are at their highest in 7 months suggesting traders expect significant price swings no matter what.
As Bloomberg reports, “There’s tension in the market, with both producers and consumers worried about what OPEC does or won’t do on Nov. 30,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “They want to be protected from surprising price moves.”
“I suspect that when the OPEC meeting is over there will have been a lot more smoke than fire,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “If they don’t come up with a convincing agreement, they’ll be forced to revisit the issue before long.”