Squeezy
Positioning sets up short squeeze.
Book recommendation: The Rivers of Money by Adi Imisirovic and Colin Bryce.
Articles
Goldman Sachs expects Brent to decline to low $50s by late 2026
OPEC+ May Unwind 1.65MM Bpd of Cuts at Next Meeting, Analyst Warns
Russian oil refineries, terminals burn as Ukraine hits Putin's war economy
All major Russian oil companies report profit decline
Macro
From stretched bearish positioning 2 weeks ago, the oil market this past week only tagged on +0.50%. Price action was extremely promising, with volumes trading at good levels and large lot sellers were lifted every time at bottom of range $63’s. All equalling good sideways consolidation-range action.
Thursdays post London session into the close was very strong, with sellers getting to work, trying to contain prices above $63.63 Q-1. A good long above, short below figure for algos looking at quarterly metrics.
Despite bears getting rumbled in the prior week, there still remains the small matter of an OPEC price war strategy at play, making bullish plays risky. But trading oil is a game of managing these types of risk.
So how risky really is it being bullish into OPEC+ increases? Over +2mbpd production is back online this year. The group however is still only exporting at Q4 2024 levels. The threat of OPEC+ barrels ‘flooding’ back onto the market is actually a massive nothing-burger! So far….
Many commentators and analysts think OPEC might be done with reintroducing supply for the year. I think this is premature. If this is a war, they will raise another 1.6mbpd at their next September 7th meeting and more in 2026. This September meeting is currently the last scheduled meeting for 2025, but can change. OPEC Meetings schedule here.
Geo Political Risk
In the face of continued successful Ukrainian attacks on Russian facilities, we have an underappreciated war risk premium on supply. Yes, Russian output is stillborn with US/EU sanctions, however, should the political tensions warm up, this would instantly bring focus back to how much Russia can add back to global legitimate supplies.
Meanwhile, Iran comes back into the picture. Thanks NewSquawk
