Brent oil future for Jan futures are trading at $86.84 a barrel while WTI Dec futures are inched up 53 cents or 0.64% to $82.84 a barrel on Tuesday morning during Asian hours at the time of reporting. Brent dec futures are set to expire on Tuesday after a fall of 3% yesterday. Brent premium over WTI widened to $5.14 a barrel during Monday’s session.
The world crude benchmark futures indices demonstrated downside momentum yesterday after both the benchmarks plunged yesterday. The bearish PMI numbers from China compounded prevailing demand fears across the market amid gloomy economic outlook. Scheduled Fed meeting and job data is in focus but consensus is on very unlikely increase in interest rate as per analysts. API numbers are due later today followed by EIA confirmations.
On the technicals side, Portfolio managers started selling petroleum futures and options last week as expected interest rate hike outweighed supply disruptions from political turmoil from middle east. Hedge funds and other money mangers sold the equivalent of 14 Mb in the six most important petroleum futures and options. Fund managers were the net sellers. Short positions widened as per report. At the outset, Fund managers are more bullish about brent and U.S diesel and more bearish about WTI.