The Globe and Mail reports in its Tuesday, July 23, edition that sentiment in the oil market has become more bearish in recent days.
A Reuters dispatch to The Globe reports that the oil market has struggled to sustain a rally despite supply restrictions that normally would be considered bullish. United States sanctions on Venezuela and Iran have removed more than 1.5 million barrels of daily supply from the market. The Organization of Petroleum Exporting Countries extended a supply-cut deal into 2020 as tensions between the U.S. and Iran rise.
Yet, Brent futures have struggled to sustain a move above $65 (U.S.) a barrel and slumped about 7 per cent last week, while U.S. futures have rarely moved above $60 (U.S.).
InsideOut Advisors analyst Janelle Matharoo says: "Given all the bullish news we've had, the flat price has hardly changed. Fifteen years ago, this kind of news would have shifted the price $20 (U.S.), $30 (U.S.) per barrel."
Hedge funds and investors
have exited bullish bets on the realization that demand may be weaker than anticipated while U.S. production surges. Producers, meanwhile, have rushed to lock in future prices, betting that this may be their best chance to protect against a sell-off.
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