Energy markets are sliding further into correction territory to start the week as technical support is breaking down and the speculative funds that have helped push prices higher appear to be heading for the exits. The OPEC meeting June 22nd will take a great deal of the market’s attention for the next few weeks, and as a Bloomberg story pointed out over the weekend, the cartel’s interests are diverging rapidly.
WTI is trading below its weekly trend-line that’s held up the rally from $42 last June. If prices can finish the week below that support, the door will be open for a run at the $60 mark over the next few weeks.
Money managers cut their net-long holdings in WTI & Brent for a 7th straight week, reaching their lowest levels in nearly 9 months. Speculators also cut their record net long holdings in RBOB gasoline by almost 14,000 contracts on the week, but still need to cut nearly 5 times that amount to reach their previous seasonal range which suggests we could see more severe selling if the liquidation continues.
Swap dealers continue to hold near the record-setting net-short position in WTI suggesting that producers are comfortable holding onto their hedge positions as production ramps up.
Baker Hughes reported 2 more oil rigs were put to work last week in the US, bringing the total count to a fresh 3 year high at 859. With US oil production hitting new records on a weekly basis recently, it’s worth pointing out that the total rig count is barely ½ of what it was at the peak in 2014.
Multiple news reports this morning say that the White House is supposed to announce planned changes in biofuels policies later today.