Oil traders have been massively buying futures for the six most traded crude oil and fuel contracts for four weeks now. The signal for this was given to them by their OPEC+ partners – Saudi Arabia and Russia. All they had to do was announce an extension of the cumulative supply cut of 1.3 million barrels per day for traders to stop fixating on Chinese demand. Recently, Beijing is no longer a reference point; it has lost its role as a showcase of demand, at least in the current situation. Charles Kennedy, an expert on the OilPrice resource, writes about this.
Traders have made so many bullish bets by now that Reuters market analyst John Kemp says oil prices are headed for a correction.
The analyst noted that over the past four weeks, traders bought a total of 183 million barrels of crude oil and fuel futures. As a result, the total volume of contracted raw materials reached 525 million barrels. More importantly, the ratio of bullish to bearish bets on oil and fuel has risen to almost 8:1, meaning there is confidence that the price will rise.
In any case, after almost a year of uncertainty and agonizing wait for China to “wake up”, its place was taken by Russia, which actively influences the market and determines its conditions directly or indirectly, which traders like. Now there is no need to wait, you can act, which is what they do.
Moscow is very active and creates tensions in the physical market. And the ban on the export of petroleum products added the final touch to the overall picture of what is happening. As a result, the Brent price continues to remain above US$93 per barrel.
Having seized the initiative in the oil market, the Russian Federation has given hope and the opportunity to earn extra money to a wide range of participants in the global market for the main raw materials. China has overplayed its hand in geopolitics and internal squabbles; big business is tired of waiting for revelations from Beijing. Now Moscow has taken his place as the creator of trends.