Oil Prices Rebound on Fund Manager Desperation
West Texas Intermediate (WTI) and Brent crude oil futures on Tuesday posted their first day-on-day gains since Nov. 17.
November WTI gained 85 cents Tuesday to settle at $54.16 per barrel. The light crude marker traded within a range from $53.10 to $54.62.
Brent crude for December delivery ended the day at $59.70 per barrel, reflecting a 74-cent increase.
Barani Krishnan, senior commodities analyst with Investing.com, contends that hedge fund managers – rather than more conventional energy price drivers – influenced Tuesday’s upward WTI and Brent movements.
“Hedge funds are desperate to end what has basically turned into a dead play for oil,” Krishnan told Rigzone. “That’s why WTI can go up nearly two percent on Tuesday on rehashed talk about OPEC mulling deeper cuts in December – how many times have we heard that in the past few weeks? – when the focus really should have been on the upcoming American Petroleum Institute and Energy Information Administration data.”
In fact, Krishnan asserted that recent crude inventory data “have not been that bad” given the “sheer collapse of refining activity” that has driven oil stock builds and surging demand for products such as diesel and jet fuel.
“But the flat price of crude is what drives WTI and Brent,” Krishnan continued. “So, naturally fund managers would rather look at headlines that tease the possibility of tighter supply – like OPEC cuts – rather than those explaining the lows in refining contributing to current range-bound prices.”
Reformulated gasoline (RBOB) also posted a gain Tuesday – but barely. Adding less than two-hundredths of a cent, November RBOB settled at $1.61 per gallon.
Rounding out the price movements of energy commodities tracked by Rigzone, Henry Hub natural gas also ended Tuesday in positive territory. The November gas contract added three cents to close at $2.27.
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