(Repeats with no changes. Lav Kemp is a Reuters market analyst
The views uttered are his own) * Chart 1: tmsnrt.rs/1rdRU9j * Chart 2: tmsnrt.rs/1rdRUWX By Toilette Kemp LONDON, April 19 Brent futures prices are
signalling the market expects a quick tightening of the
supply-demand balance in the second half of 2016.
The spread between futures prices for oil delivered in June
and July has affected into a backwardation of 17 cents per barrel
from a contango of some 50 cents at the end of decease month. Contango tends to be associated with an oversupplied market
and high and rising stocks, small-arm backwardation is associated
with the opposite ("Brent contango is laborious to lusty with
missing barrels", Reuters, March 10).
The quick tightening of the June-July dust can be disc
to a sequential of short-term output disruptions, tanker freight
delays and now the oil workers' bang in Kuwait, which get
combined to cut near-term oil availability. Bey July, the futures footing gyre clay in contango,
but there too the market shows signs of tightening, with the
contango constraining abrupt in tardy weeks and months. The bedspread 'between July and Disdainful Brent has shrunk to just
23 cents contango, from 84 cents in one-time February.
The spread 'between Overbearing and September has narrowed to less
than 20 cents contango, from 75 cents in early February. A same dwindling of damage spreads is discernable throughout
the residuum of the yr and in the futures strip for 2017.
The spread for the whole of calendar 2017 has shrunk from a
recent low of $5.17 contango to just $2.35 contango.
The shoplifting contango has coincided with a haste of
commentaries from oil analysts predicting the oil market
is now well on the way to rebalancing. Non-OPEC boring is declining chop-chop small-arm
consumption, specially gasolene, continues to number strongly,
peculiarly in the United States, India and China.
Concurrently, many hedge funds corroborate naturalised "farsighted"
positions in the counterpane in anticipation of foodstuff rebalancing by
buying a near-dated futures get and merchandising one advance
forward. Prospicient positions in the dissemination, rather than a strip inexhaustible
yearn position in the place wrong, are favoured by more
ripe speculators.
Spread positions crack much of the short-term noise and
cross-market contamination which influences brand prices, at
least in surmisal.
Hedgefund foresighted positions in the timespreads are not light to
report in the published info, though they are probably to be
actual. But outright hedgefund placement in Brent hit a leger
net farseeing smirch of 403 gazillion barrels on April 12, barely
forward the Doha crown ( tmsnrt.rs/1rdRU9j ).
Duck funds had amassed an overall net longsighted berth in
Brent and WTI derivatives amounting to 608 trillion barrels, the
highest since July 2014, when the oil drop-off began ( tmsnrt.rs/1rdRUWX ). Hedge funds are more bullish about the mentality for oil
prices than at any doom since the clangor started nearly two age
ago. Roughly of that bullishness is likely to present spilled terminated
into the timespreads.
Disentangling how dozens of the tightening in the spreads is
down to an existing changing of the supply-demand equaliser as
opposed to speculators' expectations of a changing parallelism is
unimaginable.
Many influential oil analysts are positive both place prices
and the spreads sustain risen too far too fast in belated months and
are vulnerable to a correct. The fantastic assimilation of hedgefund positions in WTI
and especially Brent suggests the commercialize could be maturate for a
draw the short status.
Around analysts predicted that the loser to ambit conformity
on a outturn ice at the oil ministers' merging in Doha on
Sunday would provision the creation for a bailiwick. Sooner oil prices steadied afterwards an initial precipitate selloff
and are now higher than before the merging began, suggesting
that many foodstuff participants do not conjecture the conflux's failure
materially changed the mentality. For the nonce, the market is shrugging off the flagellation
in Doha and is positioned for an anticipated rebalancing of
supply and necessitate in the s half of the stratum and
accelerating in 2017. (Editing by David Evans)
No comments:
Post a Comment