Russia Boosts Crude Oil Output, Hedge Funds Pare Bull Bets

russia boosts oil


Hedge funds pared Bullish Crude Oil bets for the 1st time in 6 weeks, losing faith in a swift recovery as Russia boosted output to the highest marks since the Soviet Union collapsed in Y 1991.

Speculators reduced net Length position in WTI Crude Oil by 9.1% in the week ended 29 September, according to data from the Commodity Futures Trading Commission. Longs dropped from a 12-wk high, and Short positions increased.

US Crude Oil (USO)output is down 514,000 BPD from a 40 yr high reached in June, Energy Information Administration (EIA) data show. The number of rigs targeting Crude Oil in the US dropped to a 5 year low, Baker Hughes Inc. (NYSE:BHI) said on 2 October. WTI Crude Oil traded in the tightest range since June last month as China’s slowing economy and the highest Russian output in 25 yrs signaled the global glut continues.

WTI Crude Oil decreased 1.3% in the report week to 45.23 bbl on the New York Merc. It finished at 45.54 Friday.

US Crude Oil stocks, already about 100-M bbl above the 5-year average are expected to grow, as stocks have risen during October in 8 of the last 10 years as refiners slow operations to perform seasonal maintenance.

Russian Crude Oil output rose to a post-Soviet record last month as producers took advantage of the weak Ruble to push ahead with drilling. The nation’s production of Crude rose to 10.74-M BPD, 1%more than a year earlier and topping the record set in June, according to data from the Energy Ministry’s CDU-TEK unit.

Production of crude and condensate reaches 10.74m b/d

China’s economic slowdown has produced 5 interest-rate reductions since November. The country’s growth is expected at 7.0% this year.  China is the biggest Crude Oil consuming nation after the USA.

Investors pulled $393-M in September from United States Oil Fund, the largest US ETF that tracks Crude Oil futures, the biggest withdrawal since April.

The managed money has been positive about the market but things look grim, and this is tough time for Crude Oil on a seasonal basis to boot.

In other markets

Net Length on NYMEX gasoline increased 3.8% to 17,239.Futures declined 3.8% in the frame covered by the CFTC report to 1.3632 gal. Net Short wagers on US ultra low sulfur diesel rose by 11% to 31,263.Diesel futures fell 2.2% to 1.4976 gal.

Crude Oil has been consolidating at the 45 zone since 28 August, but continuing Bearish news will soon push it due South. Many participants are not seeing the price damage coming from Iran entering the market in Q-1 of Y 2016.

HeffX-LTN Analysis for OIL: Overall Short Intermediate Long
Neutral (-0.05) Neutral (0.17) Neutral (0.15) Bearish (-0.46)
HeffX-LTN Analysis for USO:  Overall Short Intermediate Long
Neutral (-0.12) Neutral (-0.12) Neutral (0.21) Bearish (-0.46)
HeffX-LTN Analysis for UGA:  Overall Short Intermediate Long
Neutral (-0.20) Neutral (-0.12) Bearish (-0.38) Neutral (-0.11)

Have a terrific weekend.


Paul Ebeling