The Sep’25 Brent futures contract saw a week of stability in the week ending 1 July as prices largely traded around $67/bbl and stayed within a $2/bbl range. This was a period of consolidation after the volatility spikes due to the 12-day conflict between Israel and Iran, where prices rapidly sold off when the market did not expect any further disruptions in oil supply in the Strait of Hormuz. Following the deflation of the geopolitical risk premium, the market returned its focus towards fundamentals, including the OPEC+ meeting, macroeconomics, and supply and demand dynamics.
Unsurprisingly, it was a risk-off week for money managers as they reduced both long and short positions. Selling from longs accelerated as positions declined by 26mb (-8%), the fastest rate since April. Meanwhile, short positions reduced by 2.1mb (-1.7%). As a result, the long:short ratio declined from 2.50:1.00 to 2.33:1.00 (17th percentile for all weeks since 2013).
