Oil bulls take heart as OPEC rekindles hopes

Bloomberg

All it took was a few words from OPEC to encourage oil bulls. Money managers increased wagers on rising crude prices by the most since January as futures rebounded from a three-month low. Prices jumped after OPEC’s president said August 8 the group will hold informal talks in Algiers next month.
“The statement certainly achieved its purpose,” said Daniel Yergin, vice chairman of IHS Markit. “
Members of the Organization of Petroleum Exporting Countries are in “constant deliberations,” according to a statement on OPEC’s website attributed to Mohammed bin Saleh Al-Sada, Qatar’s energy and industry minister and the group’s current president.
Hedge funds bolstered their long position in West Texas Intermediate crude by 17,154 futures and options combined during the week ended Aug. 9, according to the Commodity Futures Trading Commission. WTI rose 8.3 percent to $42.77 a barrel in the report week. Prices gained 0.8 percent to $44.85 a barrel as of 1 p.m. Hong Kong time on Monday after posting the biggest weekly gain since April.
“A freeze may be on the table, maybe more,” said Mike Wittner, head of oil market research at Societe Generale SA in New York.

REFINERY DEMAND
Refiners around the world will process a record 80.6 million barrels a day of crude this quarter to absorb all-time high production from several Persian Gulf producers, the International Energy Agency said
Aug. 11. “The market is moving towards balance with a huge overhang,” Yergin said. “We see supply and demand roughly in balance, and if there are no additional disruptions prices should be in the mid $50s next year.”
Rising U.S. crude stockpiles and weakening demand from the nation’s refineries may weigh on prices. Crude supplies rose 1.06 million barrels million as of Aug. 5, Energy Information Administration data show. Over the past five years, refiners’ thirst for oil has fallen an average of 1.2 million barrels a day from July to October.
Money managers’ long position in WTI rose to 322,594 futures and options, the highest since May 2015, CFTC data show. Shorts, or bets on falling prices, increased 0.7 percent and were at a record for a second week. Net longs advanced 18 percent, the biggest jump since March.

OTHER MARKETS
In other markets, net-bearish bets on gasoline shrank 69 percent to 1,277 contracts. Gasoline futures rose 2.6 percent in the report week. Net-long wagers on U.S. ultra low sulfur diesel tumbled 72 percent to 1,984 contracts. Futures advanced 5.7 percent.