Saudi Energy Minister, Prince Abdulaziz bin Salman, warned oil speculators to exercise extreme caution in order to avoid being squeezed by the OPEC+ as was the case in April when the cartel enacted an unexpected supply cut.
“I keep advising them that they will be ouching, they did ouch in April,” the Saudi Energy Minister said at the Qatar Economic Forum in Doha on Tuesday.
The organization of oil producers will meet in Vienna on June 3-4 to discuss production policies for the second half of the year.
Bloomberg reported that Prince Abdulaziz is known for initiating unexpected strategies, even if some oil delegates say the current constraints would further tighten global oil markets.
“We have to be vigilant and proactive—as we in OPEC+ have been saying for quite some time,” he said.
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Rising Oil Short Speculative Positions
The most recent CFTC data reveals that speculators recently increased their short positions in crude oil futures to 136.5 thousand contracts for the week ending May 16. This is nearly double the number of short contracts they held on April 11.
Speculators witnessed a large short squeeze early in April as a result of OPEC+ production cuts, with the number of short contracts falling from 149 thousand to 74.3 thousand. The total number of net speculative positions in WTI futures is currently 191.5 thousand contracts, which is extremely light in comparison to recent years.
June OPEC+ Preview: Implications For Oil Prices
The price of WTI-graded oil, which is closely tracked by the United States Oil Fund USO, has been strongly related to the trend in CFTC net speculative positions over the last year.
A new surprise tightening in OPEC+ oil output in June would almost certainly have an initial positive impact on crude prices, which might be further exacerbated by the large number of speculative short bets against crude. On the other hand, if OPEC+ producers express growing discontent with supply cuts at a time of decreasing demand and dropping industrial output, the market's overall negative stance on oil may strengthen, dragging prices lower.
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