- Hedge funds have reduced their long bets
- Iran, Venezuela and other OPEC members were clearly not on the same page
- Trade tensions remain the main focal point for investors
Oil traders want able to celebrating the OPEC decision for long and the oil price has moved lower as a result of this. A moderate increase was the phrase which saved the day for oil but investors have decided to play a waiting game. Looking at the WTI net long positions, it becomes clear that hedge funds have reduced their long bets and they are expecting a lower move in the oil price. Similarly, oil explorers decided that it is time to ease off their drilling operation and last week for the first time in three months we have seen a reduction in their activity.
Opec decided to bring another one million barrel per day back on the market starting next month. The question is if OPEC members would comply with this or if we are going to see more oil on the market given that the cartel is surely divided now. Iran, Venezuela and other OPEC members were clearly not on the same page with OPEC’s decision.
The global battle over trade is going to impair global economic growth and it is also rattling investor’s confidence. These trade tensions remain the main focal point for investors today as the situation has intensified further. Europe has warned that it will react harshly if the US levies tariffs on EU cars. Donald Trump has intentions to impose 20% tariffs on European cars, he reasons adopting such a strategy would surge the demand for American cars. He could change his policy if the EU removes barriers to all American goods. Trumps’s action has a serious reaction and the evidence is available in Turkey, the country has already imposed tariffs on American rice, cars and whiskey and this was effective from June 21. There is no doubt that the EU, China and other countries would react in the same manner.
Back in the U.K., after a series of threat from major corporates, the prime minister Theresa May is under major pressure to carve up a contingency plan under a no deal Brexit scenario. Major corporates which add a considerable amount of growth and support employment in the U.K. decided to show Theresa May that the government needs to put its act together.
Bitcoin dropped below a key level of $6K over the weekend before bouncing back above this mark. There is very little good news for the crypto king and most of the bull momentum has faded and this lead us to believe that it is likely that we would see the price dropping below the $6K mark again. The key support level remains at 5605 which was the lowest point back in November last year. If we break this low, the selling pressure would intensify further.
