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Komfie Manalo, Opalesque Asia: Hedge funds and oil speculators are losing faith in the oil rally on concerns the Organization of Petroleum Exporting Countries (OPEC) will increase supply to its highest level since 2012, according to Bloomberg.
Data from the U.S. Commodity Futures Trading Commission (CFTC) shows that hedge funds’ net-long position in West Texas Intermediate (WTI) crude fell 2.1%. Futures advanced 35 cents to $60.75 a barrel on the New York Mercantile Exchange in the period covered by the CFTC report, before retreating to close at $59.69 on May 15. The net-long position in WTI slipped from a nine-month high to 262,575 futures and options. Shorts dropped 17% to 52,973 and longs fell to 315,548.
Gene McGillian, a senior analyst at Tradition Energy in Stamford, Connecticut was quoted as saying, "Until we see some real tightening of supply, the market is going to be vulnerable to a pullback. Only once we get evidence that the fundamentals are changing will prices be able to move higher."
Oil prices fell 46% last year after OPEC maintained their current output rather than relinquish market share to U.S. supply. On May 13, the International Energy Agency said that OPEC members are planning to further increase their production. The group has become more unified about keeping its output target because prices are now rising, Kuw...................... To view our full article Click here
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