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Oil doubters got a surprise from Saudi Arabia on Friday: a pledge of deeper production cuts that sent futures surging for their best week since June.
Hedge funds didn’t see that coming as they slashed net-bullish wagers on West Texas Intermediate crude by 24% in the days leading up to the OPEC meeting in Vienna. data released Friday show. Futures ended the week 7.3% higher in New York. closing above $59 a barrel for the first time since the aftermath of an attack on Saudi premises in September.
Money managers “didn’t know that this OPEC decision was coming.“ Rob Haworth. who helps oversee about $150 billion at U.S. Bank Wealth Management in Seattle. said Friday. “They have yet to price in the OPEC+ decision today.“
After two days of tense talks in Vienna. Saudi Energy Minister Prince Abdulaziz bin Salman promised to take the kingdom’s production down to levels not seen on a sustained basis since 2014. according to data compiled by Bloomberg.
In addition to deeper collective cuts by the OPEC+ alliance led by Saudi Arabia and Russia. the kingdom will continue a voluntary reduction of 400.000 barrels a day below its official target. the prince said.
Money managers’ WTI net-long position. or the difference between bullish and bearish bets. dropped to 150.311 futures and options during the week ended Dec. 3. the U.S. Commodity Futures Trading Commission said Friday. Long-only wagers decreased 12%. while shorts soared 46%.
