OPEC Sending Us Into a Bearish Regime? | S6 E26

World of Oil Derivatives

Brent Futures have been extremely bearish following US markets open, dropping to $77/bbl Monday morning. It’s all about OPEC, as the meeting over the weekend saw existing voluntary cuts extended into September 2024. This move hinted at OPEC's willingness to bring back barrels to the market. However, doubts remain about compliance from certain members and future global demand growth.

Refinery margins are overall weak, with low US gasoline demand and overall US weakness permeating the European market. However, the market has seen decent buying in Q3 at these lower levels. CFTC data for the week to May 21 showed money managers removed around 5.8mbbls of length (-7.4%) and added over 5.5mbbls (+23%) to their short positions in gasoil futures.

The team analyses looks at US fundamentals. With factors including potential hurricanes, heatwaves, and exports potentially tightening supply, WTI prices could decline relative to Brent. Martha's trade idea for this week - to short July WTI/Brent swaps - ties in. You can learn more about the trade idea here: https://youtu.be/S8GcUsnEMpg

If you would like to connect with any of our hosts on LinkedIn, please click on the hyperlinks below:

Greg Newman: https://www.linkedin.com/in/oilderivatives/
Jorge Montepeque: https://www.linkedin.com/in/jorge-montepeque-38410bb6/
Martha Dowding: https://www.linkedin.com/in/martha-dowding-ab84801a6/
Vincent Wu: https://www.linkedin.com/in/vincent-wu-099816125/
Chapters for this episode are:
0:00 Welcome
1:30 OPEC meeting recap & global supply
22:36 CFTC data
25:40 Refinery margins
38:07 Trade idea of the week
43:12 Poll & outro