Hedge funds and other speculators have reduced bets on rising oil prices. This fall was the highest in the past seven months, according to Bloomberg.
According to the U.S. Commission on commodity futures trading, the number of long positions on the rising cost of WTI in the week ending 16 February, declined by 5.3%. This is the biggest decline since July last year. While during the same period, the price of WTI rose by 3.9% to $29,04 per barrel.
As noted by Bloomberg, the drop in the number of bets on the growth of crude oil occurred despite the agreement to freeze its production, which last week reached Russia and a number of OPEC countries, Saudi Arabia, Qatar and Venezuela. That this agreement will promote growth of quotations, and many analysts doubt. So, the rise in price of oil due to the agreement questioned Goldman Sachs.
“This agreement will make nothing from the point of view of reducing surpluses,” explained Bloomberg, Bart Melek, head of commodity strategy at TD Securities. According to the expert, Iran is likely to be to produce as much oil as you need in order to regain market share.
Tuesday, February 16, Russia, Saudi Arabia, Qatar, and Venezuela has announced its willingness to freeze oil production at the January level. Countries expressed the hope that this measure will help to restrain the growth of surplus oil on the market and raise the price.
After that, the OPEC representatives held talks with Iran and Iraq to convince them to join the agreement. After the talks, the Iranian oil Minister Bijan Zanganeh said that his country supported the initiative to freeze mining as a first step to a balanced market and price recovery.
Sources later told Reuters that Tehran has refused agreement for two reasons. According to interlocutors of Agency, the Iranian authorities considered the measures proposed are insufficient, and strive to enter desanctions the level of production.
On Saturday Minister of energy Alexander Novak said that, from his point of view, to demand that Iran freeze of production is unfair. “”We understand Iran’s position, which only came out of the sanctions regime. Today, the increase in the production of Iranian oil does not seem fair to the country,” the Minister explained. Novak also said that all the advice on freezing the production should be completed by 1 March.