Oil Traders Cut Longs Further The latest CFTC COT institutional positioning report shows that oil traders cut their net long positions to four-month lows last week. The combined net-long position in oil now sits at just 411k lots, just above the 400k lows marked in December 2021 when oil turned lower in the face of fresh COVID risks around the omicron variant. Despite the reduction in longs, however, oil prices have been firmly higher over the last week as the market continues to rebound off the lows around $96, trading back up to around $115 currently.Ukraine Conflict Continues To Drive OilThe rebound higher in oil prices shows that optimism around a potential Russia-Ukraine ceasefire isn’t enough and the market will need to see something concrete, in order to bring prices down. With the violence ongoing and peace talks yet to produce anything meaningful, oil prices remain well bid. Supply disruptions linked to the war, as well as the huge amount of oil needed in the war (from both sides), means that crude has a natural bid here.OPEC Meeting In FocusLooking ahead, there is a great deal of focus on the next OPEC+ meeting scheduled for Thursday March 31st. Global leaders continue to call on the oil producing cartel and associates to step up production in a bid to counter surging energy prices. So far, OPEC has been resolute in sticking to its plan of gradually increasing oil production, as it unwinds the huge production cuts put in place across the height of the pandemic. However, with global energy prices now running away, political leaders are pleading with the group to help address the supply/demand imbalance in the market. Given the current backdrop, however, it is unlikely that OPEC will agree to raise production by a significant enough amount to bring oil prices materially lower.EIA Reports Large Crude DrawdownThe latest report from the EIA this week has given oil prices a further boost. The EIA reported a 2.5 million barrel drawdown in US commercial crude stores last week. This was a stark shift from the almost 5 million barrel surplus seen the prior week and was far deeper than the 0.7 million barrel drawdown the market was looking for.Technical ViewsCrude OilThe retest of the broken bull channel top (around the 95.93 level) has seen the market finding fresh demand. Price has since turned firmly higher and, with both MACD and RSI bullish, the focus is on further upside here with 121.56 the next upside level to note, ahead of the YTD highs. To the downside, 95.93 remains the key support, a break of which is needed to shift the current bullish view.
Source: Tickmill
