The price of oil is back close to the April highs amid the optimism of stock traders. What emerges from the COT and what to expect from the WTI oil price?
The values of energy commodities have shown a significant increase in recent weeks, and among the commodities influencing this dynamic, oil clearly emerges, whose futures trading continues to show positive signs.
Let’s find out what are the reasons behind this constant rise in the price of oil.
What is driving up the price of oil?
Analyzing the futures landscape, based on data documented by the Commitment of Traders report (Large Speculators, Percent Rank), we observe an increase in long positions in WTI oil contracts, accompanied by greater hedging of short positions.
Essentially, after hitting an 11-year low in net long exposures in June, traders appear to be continuing to liquidate their short positions. This process has been facilitated by the rise in expectations regarding a reduction in oil supply, as stated by Saudi Arabia in response to the prospect of a drop in demand generated by economic difficulties announced by some countries.
Right now, with sentiment about the global economy’s health improving, the value of oil has rallied, sparking some optimism among energy trading professionals. This trend is also confirmed by the perspectives of the main players in the sector that emerged during the Energy Asia conference. Most of them said that oil and gas would continue to be the main sources of energy for the coming decades. This opinion is also confirmed by ExxonMobil, the largest US oil company.
The main driver of growth will be Asia, where economic expansion looks set to outpace that of rival economies. An additional factor contributing to this process is the Russian-Ukrainian conflict, an extremely volatile variable that energy traders closely monitor. For example, the drone’s surprise attack on a Russian tanker demonstrated how unpredictable the dynamics affecting shipping lanes in the Black Sea can be.
WTI oil: a look at the chart
The price of oil is currently clearly in an upward phase, supported by traders’ positive sentiment and by uncertainty related to the global geopolitical picture, which seems to be characterized by considerable instability and unpredictability. The recent correction phase that began after reaching the April highs could be interpreted as a natural opportunity to take profits, even if this dynamic is not yet clearly outlined by the data in the COT (Commitment of Traders).
Overall, however, the sentiment remains favorable and the market’s attention is focused on the economic recovery of the various countries, with particular reference to China, whose recovery in consumer demand could represent a significant stimulus to oil demand.
- WTI.OIL, 1D
Original article published on Money.it Italy 2023-08-08 12:59:04. Original title: Prezzo petrolio (OIL): il peggio è ormai passato?
