OPEC Expects Crude to Reach $80 by 2020

Hedge funds slashed their bets on falling oil prices, leaving them the most bullish in two months as OPEC called for a return to $80 crude.

Money managers’ net-long position in West Texas Intermediate rose by 14,821 contracts to 147,678 futures and options in the week ended Sept. 15, according to data from the Commodity Futures Trading Commission. That’s the highest level since July 7.

The Organization of Petroleum Exporting Countries expects crude prices to rise to $80 by 2020 as output falls elsewhere. U.S. production could sink by the most in 27 years in 2016 as the price rout extends a slump in drilling. Speculators closed out short positions two days before the Federal Reserve decided not to raise key U.S. interest rates.

“The market’s not as oversupplied as we think it is,” David Pursell, a managing director at investment bank Tudor Pickering Holt & Co. in Houston, said in a phone interview. “The news out of OPEC is more bullish, U.S. production is falling and demand is great right now.”

The U.S. benchmark oil contract fell 2.9 percent in the report week to $44.59 a barrel on the New York Mercantile Exchange. The contract settled at $44.68 Friday.

Via Bloomber

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza