Chances of rising oil prices are increasing

On the one hand, oil prices remained in the range of minimum annual values, as the fear of possible recession is still strong and trading ahead of the holidays is less active. On the other hand, there is a suggestion that the price increase projected for next year has already begun.

During the latest reporting week, portfolio managers slightly increased their net long position (that is, the difference between bullish and bearish bets) on the U.S. benchmark, which is WTI Crude. For the first time in over a month, there was a situation of hedge funds adding more longs than shorts in a single week. It is worth noting that WTI futures are the most popular contracts.

According to Saxo Bank estimates, the ratio of longs to shorts in Brent dropped to 2:1, indicating the potential for growth (i.e. a bullish recovery), while the entry point is much lower than what was mostly observed during the whole last year.

Amid the tight monetary policy and rising Covid cases in China after the partial lifting of restrictions, the outlook for the near future as well as sentiment is rather gloomy. However, according to new forecasts, the end of next year may be better than last week's forecasts said.