Published on 24 Mar 2023 on Oilprice.com via Yahoo Finance
After a major decline that saw oil prices fall to multi-year lows, oil markets appear to have bottomed out and begun an encouraging ascent higher. Over the past two weeks, a general bearish and risk-off sentiment cut across asset markets and triggered a lengthy unwind of speculative positions in oil futures. A top commodity analyst blamed the unusually steep decline to significant selling by banks in response to gamma-effects as prices closed in a concentration of producer puts around USD 75/bbl for Brent and USD 70/bbl for WTI crude.
Luckily for the bulls, in the current week, oil prices have staged a remarkable turnaround, with Brent climbing from a two-year low around $70 per barrel on Monday to USD 77.20 per barrel on Thurday’s intraday session while WTI has recovered from around $63 per barrel to $71.20 over the timeframe. That’s a nearly 10% rally in the space of just three days.
And now commodity experts at Standard Chartered are saying that the path of least resistance for oil prices at this point is higher, not lower. Previously, the analysts had said that the unwinding of speculative length appears to be complete at this juncture, thus lowering selling pressure, but had warned that prices might retest the lows if the FOMC hikes its policy rate by more than the widely expected margin of 25bps.