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Crude Oil Price Movements

4

OPEC Monthly Oil Market Report – October 2017

Oil prices further improved despite a rise in US crude inventories, with the market heading for its largest

third-quarter gain in 13 years after news that OPEC and non-OPEC producers were considering extending

output adjustments. OPEC, Russia and several other oil producers have adjusted production by about

1.8 mb/d since the start of 2017, helping lift oil prices by about 15% in the past three months. In subsequent

days, oil prices soared after major producers said the global market was on its way to rebalancing, while

Turkey threatened to cut oil pipeline flows from Iraq's Kurdistan region toward its ports.

Toward the end of the month, oil prices ended lower after investors took profits following a rally to 26-month

highs, but on average, oil prices closed the month up.

ICE Brent

ended September $3.64, or 7.0% higher, to stand at $55.51/b on a monthly average basis, while

NYMEX WTI

increased $1.82, or 3.8%, to $49.88/b. Y-t-d, ICE Brent is $9.33, or 21.6%, higher at $52.51/b,

while NYMEX WTI rose by $7.84, or 18.9%, to $49.36/b.

Crude oil futures prices improved in the second week of September. On 10 October, ICE Brent stood at

$56.61/b and NYMEX WTI at $50.92/b.

Table 1 - 2: Crude oil futures, US$/b

The boost in oil prices attracted fresh

speculative length

in September. Hedge funds have become strongly

bullish on the outlook for all parts of the petroleum complex, amid signs that global crude stocks are declining

and fuels will be in short supply after hurricane-related refinery outages. But with so many fund managers

already betting heavily on a further rise in prices, the market has become disproportionate, and the risk of a

sharp reversal has increased significantly.

Hedge funds and other money managers

raised their

combined net long positions

in futures and

options linked to ICE Brent and NYMEX WTI by 196,579 contracts, about 197 mb of crude oil, over the

month to the week ending 26 September. Fund managers have amassed net long positions amounting to

760,433 lots, or 760 mb of oil, in a clear sign of returning confidence.

Graph 1 - 2: NYMEX WTI vs. Managed money net

long positions

Graph 1 - 3: ICE Brent vs. Managed money net

long position

Aug 17 Sep 17

Sep/Aug

%

2016

2017

NYMEX WTI

48.06

49.88

1.82

3.8

41.53

49.36

ICE Brent

51.87

55.51

3.64

7.0

43.17

52.51

Transatlantic spread

3.81

5.64

1.83

47.9

1.65

3.15

Note: Totals may not add up due to independent rounding.

Change

Year-to-date

Sources: CME Group, Intercontinental Exchange and OPEC Secretariat.

0

100

200

300

400

500

600

20

30

40

50

60

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Aug 17

Sep 17

US$/b

Managed money net long positions (RHS)

NYMEX WTI (LHS)

'000 Contracts

Sources: CFTC , CME Group and OPEC Secretariat.

0

100

200

300

400

500

600

20

30

40

50

60

70

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Aug 17

Sep 17

US$/b

Managed money net long positions (RHS)

ICE Brent (LHS)

'000 Contracts

Sources: Intercontinental Exchange and OPEC Secretariat.