Russian Energy Minister Alexander Novak has a contrarian message for those who question the wisdom of freezing global levels of oil output.
Despite the collapse of talks on restraining production among OPEC and non-OPEC members earlier this year, he thinks the discussions were a success that might soon be repeated.
“It (the build-up to the meeting) paved the way for a reversal of negative trends in the oil markets,” Novak told reporters last week after meeting OPEC member Venezuela’s oil minister Eulogio del Pino.
“We have seen a large amount of short positions being closed while long positions have been opened,” Novak said in reference to speculative bets – shorts – in the market that prices will fall, and the opposite – longs – that they will rise.
The statement is important as oil ministers often talk about oil supply, demand and balance but rarely touch on how market speculators – dominated by hedge funds – build their positions.