Tuesday, April 3, 2018

Crude oil futures tick higher as net long positions hit record high; Brent up at $67.92/b, WTI $63.27/b

Stock Market, 2012.

Crude oil futures continued to follow the lead of Asia in mid-morning European trade Tuesday as net speculative length in the ICE Brent crude oil contract reached a record high.

At 1005 GMT, ICE June Brent crude futures were at $67.92/b, up a touch from Monday's $67.64/b settle, while the NYMEX May light sweet crude contract was at $63.27/b, against Monday's $63.01/b settle.

Bullish market sentiment has been supporting the record net speculative length in ICE Brent futures, which hit a record high of 595,596, up 34,388 from the previous week, as the front-month contract hovered above $70/b during the reporting period ending March 27.

"Increases in WTI and Brent, why is that optimism there? Well, I think what we're looking at is a market that has strong confidence oil can move higher, there's a weak dollar, good producer cooperation, reinforced by the headlines from Russia today. Looking at OPEC and non-OPEC achieving that 5 year average by June," Harry Tchilinguirian, senior oil analyst at BNP Paribas, said of the upward swing.

News from Russia showed only a small build in crude production, in line with market expectations.

"Russia's report on a modest build of 0.02 million b/d in production, along with market expectations on the Saudi's plan to reduce physical crude oil contracts, weighed in slightly on prices, too," Phillip Futures investment analyst Benjamin Lu said.

Despite the optimism, trade tariff conflicts between the US and China have the potential to cap growth over the next six months in both the commodities and equities market, Tchilinguirian said.

"Dark clouds on the horizon -- what happens if we have an escalation of commercial trade policy restrictions? So maybe global growth gets revised downwards as a result," Tchilinguirian said.

--Caroline Knight, caroline.knight@spglobal.com
--Edited by James Leech, james.leech@spglobal.com

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