Oil prices veered between gains and losses on Monday, as the market showed skepticism that a global agreement capping output would be reached in Qatar later this month.
Output from major non-OPEC producer Russia hit a record high in March, eroding market confidence that the global supply glut is tapering off. Russia’s oil production hit post-Soviet highs of 10.912 million barrels a day, according to the Energy Ministry’s CDU-TEK unit. The figures reflect a 2.1% rise from March 2015.
Iran’s oil minister on Sunday said the country’s oil exports jumped again in March, potentially undermining a global deal to limit crude output and raise prices. Bijan Zanganeh said Iran’s oil and gas condensate exports rose by 250,000 barrels a day in March, to surpass 2 million barrels a day, according to the oil ministry’s official Shana news service. The remarks were the oil minister’s first comments since a report emerged last week that Saudi Arabia, the world’s largest crude exporter, would limit its production only if Iran followed suit.
While the same time that Saudi Arabia said Friday it would only freeze production if Iran, a fellow OPEC member, agreed to freeze as well. The outcome of freezing production ends with failure in March. Even though those large oil exporters are repeating themselves of a cut in production to sustain a stable and health oil market. However, the oversupply just continue to exist. The freeze meeting coming in the April 17 is the only reason that oil get a rally of 50% in the past month. But according to the current actions from different parties, the willingness to cut production is not that strong.
All in all, the fact that nobody limited the production in March leads the Skepticism of freezing the production then force so many hedge funds and other institutions to transfer from long positions to short positions.
Managed-money accounts increased the number of short positions in Brent by 13% to 47,806 as of March 29, according to the Commitment of Traders report from the ICE. The number of long positions—bets that the crude oil price would rise—fell by 0.3% to 404,803. That left the net long position—bets on rising prices minus bets on falling prices—down 1.8% from the previous week.
This mirrored developments in WTI, where money managers added 11,167 bets on lower prices, CFTC data showed on Friday. The net long position shrank 6.3% to 221,016—the first time it has fallen since early February.