Reuters reports that he oil market has struggled to sustain a rally despite supply restrictions that generally would be considered bullish. US sanctions on Venezuela and Iran have removed more than 1.5 million barrels of daily supply from the market, OPEC extended a supply-cut deal into 2020 and tensions between the US and Iran continue to rise.
Yet, Brent futures LCOc1 have struggled to sustain a move above $65 a barrel and slumped about 7% last week, while U.S. futures CLc1 have rarely moved above $60 a barrel.
"Given all the bullish news we've had, the flat price has hardly changed," said Janelle Matharoo of InsideOut Advisers, a commodities trading and risk management consultancy. "Fifteen years ago, this kind of news would have shifted the price $20, $30 per barrel," she told Reuters.
Hedge funds and investors have exited bullish bets on the realization that demand may be weaker than anticipated while U.S. production surges. Producers, meanwhile, have rushed to lock in future prices, betting that this may be their best chance to protect against a selloff, oil traders and brokers said.
Front-month, or current, futures contracts have not had a massive selloff - but looking at later-dated contracts, the underlying weakness is apparent.