OPEC Nations Might Act Amid Extreme Short Selling

OPEC nations are likely to act during their next meeting on 3-4 June amid current speculative trading, Standard Chartered analysts Paul Horsnell and Emily Ashford said.

• “The build-up of speculative shorts means positioning is now as bearish as at the start of the pandemic,” they said.
• “Saudi Arabia in particular has often expressed its determination not to give speculators free rein to force an extreme price downside.”
• While speculators’ actions suggest they’re more bearish than major forecasting institutions, OPEC nations may intervene to “to halt the recent rush of money to the short-side.”
• With growing crude inventories and weak demand indicators, “we think the latest data has increased momentum toward a defensive cut.”
• The next OPEC+ ministerial meeting in Vienna is scheduled for 3-4 June.
• BOFA recently said it also anticipates action from the producer group this year. The bank anticipates another 500kbpd production cut by OPEC+ this year, either in June or later.