Saudi Arabia Is Cooking Up A Surprise For The Oil Markets

Hedge funds and other money managers are once again increasing their optimistic bets on oil, as they anticipate that Saudi Arabia's production cuts during the summer will provide a stronger support to prices. According to the latest commitment of trader’s reports, the combined net long positions (the difference between bullish and bearish bets) in WTI and Brent experienced the most significant surge in three months, during the period from July 3 to July 11. Additionally, there was substantial buying activity in the six most crucial petroleum futures and options contracts, marking one of the most substantial increases seen in the past decade. Furthermore, it is expected that money managers' positioning has further improved after the reporting period ending on July 11, especially with the market rally spurred by lower-than-anticipated U.S. inflation on July 12. This rally led to Brent Crude breaking above $80 per barrel for the first time since May. The optimism among portfolio managers regarding crude and fuels has been on the rise ever since Saudi Arabia's announcement in early July to extend its unilateral 1 million bpd production cut into August.