FLUX INSIGHTS REVIEW
October proved to be a more volatile month for crude, where flat price saw a stunning reversal in late October just as Brent was on the cusp of falling below $60. A dose of shock was injected into the market, especially for the bears. In the days leading up to the sanctions announcement on Rosneft and Lukoil, two of Russia’s largest oil majors, money manager short positioning in Brent was at a record high. This shows the extent to which speculators believed the bearish narrative, where the timing of the sanctions nearly instantly deflated the bearish momentum. The Brent price rise was the largest since the 12-day war earlier this year, reflecting a market caught off guard. Ultimately, it was a mean reversion as prices saw resistance at key technical moving averages. Our CTA positioning index showed that CTAs were nearly max short in Brent, providing ammo for any short covering rally. But with positions reset, there is capacity for greater downside momentum, if bearish catalysts allow for it.
