Market News Russia broke its promise! The OPEC+ production increase plan may continue until September next year! Are oil prices still bullish next?
Russia broke its promise! The OPEC+ production increase plan may continue until September next year! Are oil prices still bullish next?
Fundamental news showed that Russia did not fulfill its promise to send more natural gas to Europe on Monday. At the same time, the UAE Energy Minister stated that OPEC+ may continue to implement its current plan to increase production by 400,000 barrels a day until September 2022. The overall picture is that hedge funds still believe that prices are more likely to rise further than to fall.
2021-11-09
9338
After two consecutive weeks of oil price declines, U.S. crude oil fluctuated within a narrow range on Tuesday, and the market's wait-and-see sentiment gradually increased. However, after the shock, the fundamental situation is expected to continue to push oil prices upwards. The following are the fundamental factors for bullish oil prices.
Russia showed no signs of sending more natural gas to Europe on Monday, which deepened Europe’s concerns about tight supply, high prices, and dependence on Moscow’s energy as the winter approached.
The Dutch TTF December natural gas futures contract rose nearly 10% on Monday and then slowed down.
Russia provides one-third of Europe’s natural gas, and Russia’s supply intentions are crucial when the spot price surge has an impact on both households and businesses.
The Kremlin said that Russia has promised to send more natural gas to Europe after its domestic storage tanks are replenished, and Gazprom said this will be completed by Monday.
However, data on the website of the German transmission company Gascade shows that Gazprom has not booked new capacity for the natural gas pipeline through Ukraine, and the flow from Poland to Germany through the Yamal-Europe pipeline was zero on Monday.
European politicians worry that Moscow will use this situation for political purposes and accuse Russia of manipulating the market to push up prices. Russia denies this.
Russia denies that it refuses to supply supplies to Europe in order to put pressure on German regulators to approve the Beixi 2 natural gas pipeline.
Germany must certify the pipeline by early January.
Putin has said that natural gas may begin to flow through this new pipeline from Russia within a day after approval.
Last week, the oil-related derivatives market was hit by the biggest hedge fund sell-off in nearly three months, as portfolio managers realized some profits after the recent rise in oil prices.
In the week ending November 2, hedge funds and other fund managers sold the equivalent of 45 million barrels of crude oil in the six most important oil-related futures and options contracts.
Most of the selling is due to the reduction of existing long bullish positions (39 million barrels) rather than the creation of new short positions (+6 million barrels), which is consistent with profit settlement rather than aggressive short selling.
Despite this, portfolio managers are still bullish on oil prices, but not as bullish as they were two weeks ago.
The crude oil position ratio is still very high, but it has declined moderately from the recent high on October 19.
The overall situation is that hedge funds still believe that prices are more likely to rise further than to fall, but after a strong rebound, the balance of risks has undergone some changes, inducing some people to lock in some profits.
UAE Energy Minister Suhail al-Mazrouei told the media on Monday that if there is market demand, the Organization of the Petroleum Exporting Countries and its allies OPEC+ can increase oil supply.
In an interview with Dubai Channel, he said that the UAE has the ability to supply more crude oil to the market if needed and approved by OPEC+.
At a meeting last week, OPEC+ insisted on its plan to increase oil production by 400,000 barrels per day per month, and rejected the US call for exceeding this output to control oil prices.
In an interview, Mazrouei said that the UAE and its OPEC+ partners may continue to implement the policy until September 2022 to reach the level of production before the coronavirus pandemic.
He said that the current policy of 400,000 barrels per month may lead to oversupply in the first quarter of 2022, and it is expected that the United States will continue to extract from its strategic oil reserves until 2025.
Mazrouei said at a conference in Dubai that day that insufficient investment in the oil and gas industry may lead to higher energy prices.
European energy tensions continue
Russia showed no signs of sending more natural gas to Europe on Monday, which deepened Europe’s concerns about tight supply, high prices, and dependence on Moscow’s energy as the winter approached.
The Dutch TTF December natural gas futures contract rose nearly 10% on Monday and then slowed down.
Russia provides one-third of Europe’s natural gas, and Russia’s supply intentions are crucial when the spot price surge has an impact on both households and businesses.
The Kremlin said that Russia has promised to send more natural gas to Europe after its domestic storage tanks are replenished, and Gazprom said this will be completed by Monday.
However, data on the website of the German transmission company Gascade shows that Gazprom has not booked new capacity for the natural gas pipeline through Ukraine, and the flow from Poland to Germany through the Yamal-Europe pipeline was zero on Monday.
European politicians worry that Moscow will use this situation for political purposes and accuse Russia of manipulating the market to push up prices. Russia denies this.
Russia denies that it refuses to supply supplies to Europe in order to put pressure on German regulators to approve the Beixi 2 natural gas pipeline.
Germany must certify the pipeline by early January.
Putin has said that natural gas may begin to flow through this new pipeline from Russia within a day after approval.
Profit-taking hits oil prices, but managers are still optimistic about future oil prices
Last week, the oil-related derivatives market was hit by the biggest hedge fund sell-off in nearly three months, as portfolio managers realized some profits after the recent rise in oil prices.
In the week ending November 2, hedge funds and other fund managers sold the equivalent of 45 million barrels of crude oil in the six most important oil-related futures and options contracts.
Most of the selling is due to the reduction of existing long bullish positions (39 million barrels) rather than the creation of new short positions (+6 million barrels), which is consistent with profit settlement rather than aggressive short selling.
Despite this, portfolio managers are still bullish on oil prices, but not as bullish as they were two weeks ago.
The crude oil position ratio is still very high, but it has declined moderately from the recent high on October 19.
The overall situation is that hedge funds still believe that prices are more likely to rise further than to fall, but after a strong rebound, the balance of risks has undergone some changes, inducing some people to lock in some profits.
UAE Energy Minister: OPEC+ may maintain the current production increase plan until September 2022
UAE Energy Minister Suhail al-Mazrouei told the media on Monday that if there is market demand, the Organization of the Petroleum Exporting Countries and its allies OPEC+ can increase oil supply.
In an interview with Dubai Channel, he said that the UAE has the ability to supply more crude oil to the market if needed and approved by OPEC+.
At a meeting last week, OPEC+ insisted on its plan to increase oil production by 400,000 barrels per day per month, and rejected the US call for exceeding this output to control oil prices.
In an interview, Mazrouei said that the UAE and its OPEC+ partners may continue to implement the policy until September 2022 to reach the level of production before the coronavirus pandemic.
He said that the current policy of 400,000 barrels per month may lead to oversupply in the first quarter of 2022, and it is expected that the United States will continue to extract from its strategic oil reserves until 2025.
Mazrouei said at a conference in Dubai that day that insufficient investment in the oil and gas industry may lead to higher energy prices.
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