Non-commercial net long futures and options positions in Brent on ICE eased back 758 positions to 186,258 positions for the week to 20 March. That made for the fourth week running in which positions have traded around the 186-187k mark with traders showing little direction. In the meantime, Brent has moved from USD 121.55/bbl to USD 126.22/bbl and back to USD 124.12 at the reporting dates. Trading on the respective long and short sides has also shown comparatively little movement. Since 28 February, non-commercial longs are up 1.9% to 352,003 positions while shorts are up 4.7% to 165,745 positions.
Over the last month, the forward curve has been quite steady after the aggressive shift up at the near end that took place during February. The curve remains in backwardation, which is typically a sign of physical tightness, despite the implied level of over-supply in the market (see OPEC Increase Trumps Non-OPEC Cut of 14 March).
One explanation might be that extra OPEC volumes have, reportedly, mainly gone into OPEC storage although that still brings it closer to being available as a real supply, rather than still having to be produced from the oil fields.
President Obama is due to make his determination on the price and supply sufficiency condition as a precursor to new Iran sanctions by this Friday. That is likely to be a key driver to oil this week. Waivers were announced last week for ten EU countries, including all the main Euro consumers of Iranian crude, and to Japan. The substantial likelihood must be that Obama will find the condition met but we continue to believe that he has the option to find that it is not met, based on the EIA report published 29 February (see Increasing Oil Price Forecast, But Only to USD 105/bbl of 20 March).