Crude Traders Increase Longs

The latest CFTC institutional positioning report shows that oil traders increased their net long positions last week by a further 5,906 contracts, taking the total position to 355,064 contracts. With this latest increase, crude stockpile levels come back up off multi-year lows following the recent string of sales we’ve seen in recent months. The upside move likely reflects the more positive sentiment seen over recent sessions with oil prices having recovered off the 69.53 level, trading back up to highs around 74.46 as of writing.

OPEC Raises Demand Outlook

Oil prices have recovered firmly over the last month with the market following the correction from highs around 77.40 to the mid-summer lows around 60.55. Global demand concerns have taken hold of late, sending oil prices higher. OPEC recently upgraded its global demand outlook for the coming year with expectations that the global recovery will continue to bloom on the back of the height of the pandemic passing.

While OPEC has stepped up its oil production this year, the group recently passed up on the opportunity to raise its production increases. However, the cartel cited residual pandemic uncertainty as the driver behind pausing their production increases. However, since that meeting, prices have risen steadily, reflecting the ongoing uptick in demand.

EIA Reports Further Stockpile Fall

The latest report from the Energy Information Administration this week served as further evidence of the ongoing lift in demand. The EIA reported that US crude stockpiles fell to their lowest level in 3 years last week. Commercial inventories fell by a further 3.5 million barrels last week, surpassing expectations for a 2.4 million barrel decline. On the back of this latest fall, crude stocks are now sitting at their lowest point since Q3 2018. The report was not totally bullish, however. Despite the fall in crude stocks, gasoline inventories were seen rising by 3.5 million barrels last week to 221.6 million barrels.

Technical Views

Crude Oil

The recent test of the 69.53 level support has seen the oil market turning higher once again with price now continuing the breakout from the bearish channel from YTD highs. With indicators both bullish here, the focus is on a further push higher with the 74.46 level the next upside marker to note, a break of which will put 76.78 in view next.