ICE-Brent crude speculators raise net long positions by 55,630 contracts to 222,347 in week to July 8

ICE-Brent crude speculators raise net long positions by 55,630 contracts to 222,347 in week to July 8

Oil prices retreated on Tuesday following a nearly 2 percent climb in the previous session. Brent crude futures fell by 22 cents, or 0.3 percent, settling at $69.36 a barrel by 03:30 GMT, while U.S. West Texas Intermediate crude dropped 27 cents, or 0.4 percent, to $67.66 a barrel [1]. These movements were influenced by new developments regarding U.S. tariffs and a higher-than-expected output increase from OPEC+ for August.

On Monday, U.S. President Donald Trump began informing trade partners about the commencement of sharply higher U.S. tariffs on August 1. However, he later clarified that this deadline was not 100 percent firm. This announcement created uncertainty in the market, raising concerns about potential negative effects on the global economy and oil demand [1].

Despite the uncertainty, current demand remains robust, particularly in the U.S., the world’s largest oil consumer. A record 72.2 million Americans were projected to travel more than 50 miles (80 km) for Fourth of July vacations, according to data from travel group AAA released last week [1]. Additionally, investors maintained a bullish outlook heading into the holiday period, as evidenced by data from the U.S. Commodity Futures Trading Commission, which revealed that money managers increased their net-long positions in crude oil contracts during the week leading up to July 1 [1].

Further signs of heightened demand were apparent in India, the world’s third-largest oil consumer, with government data indicating that fuel consumption in June was 1.9 percent higher than the previous year [1]. On Saturday, OPEC+ agreed to boost production by 548,000 barrels per day in August, surpassing the 411,000-bpd hikes implemented in the prior three months. This decision effectively reverses nearly all of the 2.2 million-bpd voluntary cuts enacted by the group [1].

The August increase marks a significant rise from the monthly increases of 411,000 bpd that OPEC+ had approved for May, June, and July, as well as 138,000 bpd in April [1]. This decision will reinstate nearly 80 percent of the 2.2 million-bpd voluntary cuts from eight OPEC producers back into the market [1]. However, the actual output increase has been smaller than initially planned, and the majority of the supply has been sourced from Saudi Arabia [1].

Saudi Arabia raised the August price for its flagship Arab Light crude to a four-month high for Asia. Goldman analysts anticipate that OPEC+ will announce a final increase of 550,000 bpd for September during the next meeting on August 3 [1]. Oil prices also faced pressure as U.S. officials indicated a delay on tariffs but did not provide specific details regarding the change [1].

ICE-Brent crude speculators raised net long positions by 55,630 contracts to 222,347 in the week to July 8, indicating a bullish outlook despite the recent price dip [2]. This increase in long positions suggests that investors are confident in the market's ability to absorb the larger-than-expected supply from OPEC+.

References:
[1] https://economymiddleeast.com/news/crude-oil-prices-retreat-over-0-3-percent-to-69-25-as-u-s-tariffs-opec-output-weigh/
[2] https://tradingeconomics.com/commodity/brent-crude-oil