The risk of war receded, and Hedging funds sold oil at the fastest pace in more than six longest months

(1) As there were signs that Israel and Iran had chosen not to escalate the conflict, investors sold oil at the fastest pace in six long months, causing crude oil prices to stop pump before hitting $100 a barrel. (2) In the seven days ending April 23, Hedging funds and other fund managers sold the equivalent of 95 million barrels of the six most important oil futures and options contracts. (3) According to reports submitted to ICE Futures Europe and exchange CFTC, this is the fastest selling rate since October 2023, with a cumulative two-week sale of 119 million barrels. (4) Total open interest fell to 566 million barrels (49th percentile) from 685 million barrels on April 9 (66th percentile for all weeks since 2013) as the war risk premium disappeared. (5) In the last week, there has been a lot of selling in most markets, especially crude oil and European diesel, which are the most vulnerable to the Middle East conflict. Funds sold Brent crude (-39 million barrels), New York Mercantile exchange (NYMEX) and ICE U.S. crude (-26 million barrels), European diesel (-24 million barrels) and U.S. gasoline (-7 million barrels), although U.S. diesel Position was unchanged. (6) Total crude oil Holdings fell to 453 million barrels (46th percentile) from 522 million barrels (59th percentile) earlier this month at the height of the Iran-Israel confrontation. (7) The bullish Long Position to fall Short Position ratio fell sharply to 3.51:1 (33rd percentile) from a recent high of 4.97:1 (61st percentile) in late March. The fund manager concluded that oil production facilities around the Persian Gulf or oil tanker routes through the Strait of Hormuz were not threatened for the time being. (8) Saudi Arabia and its OPEC+ allies continue to limit production, but expect a gradual increase in production in the second half of the year. Increased production in non-Organization of the Petroleum Exporting Countries (OPEC) countries such as the United States, Canada, Brazil and Guyana could meet most of the consumption rise in 2024. Global inventories remain close to long-term seasonal averages, while Saudi Arabia and other OPEC members in the Middle East have more than 4 million b/d of spare capacity