Originally published by AxiTrader
Key Takeaway
For the first time in a month big speculators reduced their net long in US WTI markets. That's the latest from the CFTC according to data it released on Friday night.
That reduction in net longs to 525,254 is still a record level of net longs, save for the previous week's mega-position of 556, 607 reported by the CFTC the previous Friday.
So it's not like the bulls have left the arena. But is it a sign of a turn in the outlook?
What You Need To Know
The Saudi's cut prices to their Asian clients it was revealed on Friday as the Kingdom tries to shore up its market share in the region. That comes after the Saudis raised prices in the previous two months and suggests more competition, and supply, than the Saudis expected.
Reuters quoted an Asian buyer who deals with Aramco but wanted to remain anonymous as saying "they are serious about market share now.many barrels are left (unsold).
That news coincided with US oil producers adding additional rigs for the seventh week in a row according to Baker Hughes.
But WTI and Brent prices are still rangebound and actually rallied Friday.
Yet for this range bound price action I wonder if the first cracks in the bulls resolve may have been seen in the past week.
Both open interest and net longs fell last week as oil rejected the top of its current range. It doesn't guarantee lower prices.
But when you throw in the Saudi actions in Asia, Russian energy minister Novak's dismissal that it is too early to talk about an extension of the OPEC, non-OPEC production deal, plus reports that the extraction price of US shale has fallen under $40 suggest prices may not be on the upward trajectory myself and many thought just a month ago.
The bulls appear to have run into a wall of worry. While the range holds we are going nowhere. But a break would be decisive.
$50.20/50 is the key support with $55.20/50 the top of the range in WTI terms.
Have a great day's trading.