Exodus out of long oil positions continues

Speculators are growing increasingly anxious about staying long ahead of OPEC's meeting at the end of the month

Investors continued to retreat out of WTI futures and options last week, dumping more than 28k long contracts while adding nearly 6k in short positions. Oil prices have gone full circle from the Algiers OPEC agreement and are threatening to dwindle further on technical dynamics as well as the uncertain outcome from this week's US presidential election. We expect there will be little direct impact on oil markets as a result of the election. Hilary Clinton has a more 'green' agenda but the impact will be felt more in power markets—largely on coal—than on oil in our view.

Brent positioning followed suit with its WTI counterpart. Speculative positions in futures and options fell more than 30k lots thanks to the largest increase in short positions since the start of August. The stakes for OPEC to agree a deal are getting higher by the week as the oil market has returned to looking at fundamentals which seem to struggle to support oil at much more than USD 50/b in current conditions.