Author丨Chen Zhi
Edit丨Zhang Xing
Picture Source丨Xinhua News Agency
Hong Kong OPEC+ decided to reduce the average daily crude oil output by 2 million barrels from November, the long-short game of in the global crude oil futures market has escalated again.
"Affected by the significant production cuts of OPEC+, there are two new changes in the crude oil futures market. One is that speculative capital has returned to the long crude oil futures market again, and the other is that many asset management institutions have cut short positions in crude oil futures because they realize that as long as oil prices hover at low levels, OPEC+ may continue to reduce production significantly until oil prices rebound to the level they recognize." A crude oil futures broker analyzed to reporters. The latest data released by the U.S. Commodity Futures Trading Commission (CFTCh) shows that as of October 4, the net long positions of Brent and WTI crude oil futures held by speculators increased by 53,179 contracts compared with the previous week to 373,467 contracts, the highest value in the past 11 weeks.
"However, the CTA strategy fund and commodity investment funds have not yet returned to the crude oil futures market, which has caused OPEC+ to significantly reduce the boost effect on oil prices. "The crude oil futures broker bluntly said.
Tonglian data Datayes shows that after OPEC+ significantly reduced the average daily crude oil production capacity by , the main contract quotation of WTI crude oil futures once rose from US$85.4/barrel to US$93.3/barrel, but as the USD index rebounded in the past two days, the main contract quotation of WTI crude oil futures fell back to around US$89/barrel again.
"The fear of a strong dollar is also the main reason why traditional crude oil long capitals such as CTA funds and commodity funds have been reluctant to use the OPEC+ production cut effect to return to the crude oil futures long market." Helima Croft, global commodity strategy director at BC Capital Markets, said. At present, they are all watching the strong US dollar between OPEC+. Who can finally win this battle of speaking for crude oil pricing and then decide on the next investment decision.
Researcher Zou Zhiqiang, a researcher at the Middle East Research Center of Fudan University, believes that the reason why OPEC+ countries such as Saudi decided to significantly reduce crude oil production capacity by 2 million barrels per day is mainly based on their own national interests. Because these oil-producing countries need oil prices to remain at a relatively high level, they can obtain relatively generous fiscal revenue to support the national economic development. But this move undoubtedly damaged American interests. Because the United States is actively using the strong dollar to lower oil prices, thus causing U.S. inflation to fall.
Multiple hedge fund managers at Wall Street told reporters that it is impossible to predict which one wins and who loses this new struggle for pricing voice in the crude oil market. But an indisputable fact is that OPEC+ will no longer tolerate continued decline in oil prices to damage its core interests. This has led to more and more investment institutions that betting on the dollar hit new highs, and they are afraid to bet on lower oil prices anymore because they realize that the move is facing increasing policy risks.
Crude oil futures pricing power quietly "changed hands"?
reporter learned that on October 5, OPEC+ decided to significantly reduce crude oil production by 2 million barrels per day, invisibly stimulated the buying popularity of the global crude oil futures market.
"Originally, the pricing power of the crude oil futures market was almost dominated by quantitative capital. They were completely shorting the US dollar and making profits in short selling of oil prices, and did not consider the changes in the fundamentals of fundamentals of ." The above-mentioned crude oil futures broker told reporters. This has led many investment institutions that believe that oil prices are undervalued to avoid them.
In his opinion, this is exactly the situation the US government is most willing to see. Because the strong dollar has caused oil prices to continue to fall, it can greatly reduce the inflation pressure of the United States.
However, has "loosened" as OPEC+ decides to significantly reduce crude oil production capacity by 2 million barrels per day, the current situation where quantitative capital dominates crude oil futures pricing has shown.
In the past week, more and more speculative capital and event-driven funds have entered the market, buying the price of oil, pushing the main contract quotation of WTI crude oil futures once back above US$90 per barrel.
Tonglian Data Datayes shows that speculative capital's bottom-buying and buying tide of crude oil futures began to rise at the end of September. At that time, the market rumored that OPEC+ might cut production significantly, causing speculative capital to influx in, driving the main contract quotation of WTI crude oil futures to bottom and rebound by more than 13%. Many speculative capital even "ignore" the containment effect of the strengthening of the US dollar on oil prices and resolutely joined the camp of buying and rising oil prices. The obvious sign of
is that the US dollar index has only fallen from 114.78 to around 113.12 in the past two weeks, but the main contract quotation of WTI crude oil futures has quickly rebounded from US$76.25 per barrel to around US$89 per barrel.
"Behind this, more and more speculative capital is betting that crude oil futures will break away from the strong impact of the US dollar and continue to rebound to US$95-100 per barrel. Because this is also the price OPEC+ hopes to see." The crude oil futures broker analyzed. Because they also realize that in the face of the suppression effect brought by the strong US dollar on oil prices, OPEC+ may take large-scale production cuts and other measures to support oil prices, so that the strategy of buying at the bottom and raising oil prices will have a higher chance of winning.
reporters also learned that in the past week, many investment institutions that bet on , the Federal Reserve continue to hawkishly raise rates and have also quietly joined the camp of buying at the bottom to raise oil prices. Because they believe that as long as oil prices continue to rebound, the Fed will have to continue its hawkish interest rate hike strategy, allowing them to obtain richer excess returns in the interest rate derivatives market.
Why are traditional crude oil bulls slow to enter the market
It is worth noting that OPEC+ has significantly reduced crude oil production by 200 barrels per day, how long and high can it bring to oil prices? It is also highly concerned by the financial market.
"In the past two days, the strong US dollar has made a comeback again, causing the WTI crude oil futures quotation to fall suddenly after hitting US$93 per barrel." The aforementioned crude oil futures broker admitted to reporters. The reason is that when quantitative capital saw the rebound of the US dollar index, it quickly increased its short positions in crude oil futures, resulting in a corresponding decline in oil prices.
In his opinion, considering that quantitative capital accounts for about 30% of the trading volume in the crude oil futures market, if traditional crude oil long capital such as CTA strategy funds and commodity funds have not returned to the crude oil futures market for a long time, the oil price boost effect brought about by OPEC+'s significant production cuts is likely to be "flash-of-the-pan".
A person in charge of Wall Street CTA strategy fund told reporters that although they have always believed that oil prices are underestimated, they are still extremely cautious in the face of the buying and profit opportunities brought by the sharp reduction in OPEC+ production. Because they are worried that OPEC+ may not be able to regain the right to price the crude oil market. The crux of the problem is that crude oil futures pricing is denominated in US dollars. As long as the Federal Reserve continues to raise interest rates, the US dollar continues to hit new highs, the price of crude oil will eventually face huge downward pressure.
"What's more, the European energy supply storm is causing a rapid recession in the European economy and the sharp drop in the euro exchange rate, which invisibly drives the US dollar index to rise passively, posing greater downward pressure on oil prices." He said bluntly. There are not many CTA strategy funds and commodity funds that have returned to the long market of crude oil futures. Another reason is that the previous sharp drop in oil prices caused their net value to suffer heavy losses, which has led to them being "careful" about new opportunities to buy and rise, and they are very afraid that they will step on the mine again.
reporters learned from multiple sources that even if some CTA strategy funds and commodity funds enter the market to buy crude oil futures at the bottom, the funds they invested are quite limited. One of the important reasons is that the Federal Reserve continues to raise interest rates, which is causing the cost of leveraged financing to rise, which greatly restricts the leveraged funds that these funds can use, and it is difficult to have a higher impact on oil price fluctuations.
"This is also an important reason why many commodity funds and CTA funds would rather miss this opportunity to make profits than take risks. They would rather wait for the winners and losses between OPEC+ and the strong US dollar to decide on the next investment decision." Stephanie Lang, chief investment officer of asset management agency Homrich Berg, pointed out.
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Editor of this issue Li Yutong Intern Wu Ziying
