After the OPEC meeting earlier this month, oil prices surged above $90 per barrel, and hedge funds and other large oil futures market participants may also have seen some profit taking.
Profit taking began shortly after the meeting, but the pace of exiting oil positions has accelerated recently. Market analyst and columnist John Kemp reported that last week, traders withdrew from the oil and fuel markets at the fastest pace in the past decade, reducing their total risk exposure by 140 million barrels.
In the past three weeks, institutional traders have sold 197 million barrels of crude oil, accumulating a position of 398 million barrels in the previous 12 weeks.
Concerns about the near future prospects of the global economy are undoubtedly one of the reasons. The International Monetary Fund (IMF) stated this week that rising energy prices will contribute to inflation, exacerbating concerns. According to the IMF, every 10% increase in oil prices will increase inflation by 0.4%, exacerbating the already unstable situation in many parts of the world.
Gita Gopinath, Vice President of the IMF, said, "The debt level is at a record high level, while we are in an environment of relatively high interest rates for a long time. There are many... this may go wrong
In fact, when it comes to debt, the Wall Street Journal recently reported that for the first time in history, there is uncertainty in the allocation of the latest sovereign debt issued by the United States. The supply of US debt this year was significantly higher than usual, bringing US debt to a record level, but there are signs that demand may not correspond to the increase in demand.
There are also geopolitical factors. With the outbreak of new wars in the Middle East, the biggest question seems to be whether Iran and the United States will be more directly involved. If this situation occurs, people seem to unanimously expect oil prices to soar. But this price surge will hit the economy, and it will seriously hit the economy, which may mean that traders are preemptive, especially because they have not shifted from bullish to bearish, meaning they do not expect prices to plummet soon.
At the same time, there have been some positive changes, with media reports suggesting that the United States and Venezuela may be reaching an agreement to lift sanctions against Caracas. This news led to a 1% drop in oil prices.
