β#worldnews #Oil #BrentCrude β
π Oil is capable of short-squeezing
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Large speculators cut their net long position in the four most liquid Brent and WTI crude futures by 62.5% (52,285 contracts), the lowest in the history of such statistics. Markets fear that the global oil supply glut is overstated and that demand from China is not so weak.
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Chinese refineries processed about 12.6 mln bpd in August, a 10% drop from the previous month and a 17.5% year-on-year decline. China's actual oil demand fell below 12.8 mln bpd, the lowest since August 2022, while crude inventories rose by about 3.2 million bpd.
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Nevertheless, the market decided that it badly needed a bullish correction.
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Due to incorrect demand estimates (according to CFTC/ICE data for the week through September 10), the volume of long speculative oil positions fell to their lowest level in twelve years, while the volume of speculative shorts reached a seven-year high.
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Brent cheapened by about 5% amid aggressive selling by large speculators (both in the form of closing long positions and opening short positions). Continued supply disruptions in Libya and larger-than-expected supply disruptions due to Hurricane Francine have kept the oil market on edge. As of Thursday, nearly 42% of production in the Gulf of Mexico had been shut in.
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Both major benchmarks are ready to interrupt the fall. Now, the market has almost ideal conditions for a short squeeze, i.e., price growth on the background of large-scale short position closing. Any information occasion is enough for that.
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With a favorable fundamental background, we estimate the growth potential from the current levels: Brent - by about 3.5-4% ($75-76.50 zone), WTI - to the zone of large options $73.50-74.20.
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The Fed will speak tomorrow so that speculators may be very active. Let's behave reasonably and avoid taking risks for nothing.
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Profits to yβall!