OPEC+ is winning the war against short-sellers.
Saudi Arabia led the coalition that announced last week’s shock decision not to cut oil production. It stated that it was meant to punish speculators and discourage them from placing unwarranted bets on crude prices. If this was the reason, then most recent data shows that the group succeeded.
According to data from ICE Futures Europe, money managers reduced short-positions in Brent crude oil by 29118 contracts in week to April 4. This was the largest drop since 2020. The 46% drop in percentage last week is the largest since 2011.After fears about banking turmoil and slowing economic growth, the Organization of Petroleum Exporting Countries (OPEC) and its allies promised more than 1,000,000 barrels per day of cuts starting May. This led to a build-up of short positions that drove crude oil prices down to $70 per barrel last month.
Futures traded at $84 per barrel in London on Tuesday, and the market quickly recovered. Washington was critical of the move, citing concerns about resurgent inflation. However, higher prices should help many OPEC+ countries cover their government spending.
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