In this week’s crude pendulum, we swung above $80 and back down again in a (co)sinusoidal fashion. Range trading seems to be the play here, and the trend-latching CTAs would have likely been well rewarded. The amount of outright managed money shorts in the main oil futures benchmarks is exceedingly high compared to historical levels, pressuring the long:short ratio of Brent futures down to levels last seen during Covid. Crude reacted positively to Fed Chair Jerome Powell’s speech on Friday. On top of this, genuine supply concerns materialised amid Libya’s Central Bank crisis, with Libya’s oil blockade expected to disrupt up to 1mb/d for several weeks. This generated a huge commotion in the oil markets, launching Brent above $80, vindicating the tightness in the North Sea crude market. However, Brent failed to find a footing there and began a rapid descent into the Dark 70s. Between the 70s and the 80s, we think the former is ever so slightly winning this tug-of-war.
