Brent slips below $80/bbl as oil investors brace for Trump 2.0

The front-month ICE Brent contract has lost $1.05/bbl on the day, to trade at $79.42/bbl at 09.00 GMT.

PHOTO: Crude oil barrels along with an arrow indicating the price decline. Getty Images

Upward pressure:

Oil prices have found some support from the latest positions data, as money managers and hedge funds increased their net-long bets on ICE Brent futures over the last reporting week, driven by fresh buying in the global oil market.

Speculators bought about 27,000 lots as of last Tuesday to leave them with net-long positions in Brent futures of 254,000 lots, according to futures and options data from ICE Futures Europe.

The surge in buying came amid growing supply-related concerns from Russia, following stricter US sanctions against the country’s energy sector. “Investors have built the most bullish position in petroleum for nearly nine months, anticipating US sanctions will reduce exports from Russia and Iran and cause inventories to deplete even faster,” independent market analyst John Kemp remarked.

When speculators boost their net-long positions, oil prices typically rise. Conversely, when they reduce these positions, prices tend to decline, leading to a cycle where their actions can influence the market and oil prices.

Downward pressure:

Brent’s price has shed over $1/bbl following Donald Trump’s inaugural speech as the 47th US President. His speech has reassured oil investors of a US supply influx this year.

“Crude oil fell as Trump promised to boost US crude production. He reiterated his goal to encourage more output by cutting red tape and allowing drilling on previously banned federal lands,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

The potential tariffs on Canada and Mexico could reduce some supply to the US. However, incentives aimed at increasing domestic production will help offset these concerns, according to market analysts.

“Donald Trump signed a flurry of executive orders hours after taking oath as US President on Monday. Nearly all the measures that are directly or indirectly material for the oil markets are slow-burn and may prompt a knee-jerk reaction in crude futures,” VANDA Insights’ founder and analyst Vandana Hari remarked.

By Aparupa Mazumder

Please get in touch with comments or additional info to news@engine.online