Oil prices retreated slightly from the one-month high of the previous week and made a slight weekly drop.
On the week closing, Brent crude price deteriorated to $66.11 per barrel and West Texas Intermediate (WTI) declined to $62.14 per barrel. Both benchmarks made a weekly loss of less than $1.
Oil prices are still being influenced by COVID-19 worries and an uncertain oil demand recovery, even though commercial oil inventories across the Organization for Economic Co-operation and Development (OECD) countries are already back down to their five-year average.
The market is torn between confusing news from the second and the third-largest oil consumers: China and India.
On the bearish side, the record number of coronavirus cases in India is delaying oil demand recovery to pre-pandemic levels and threatening a speedy rebound. This is also tempering optimism around positive signs of oil demand recovery in Asia.
However, on the bullish side, stronger demand outlook and signs of economic recovery in China offset concerns about rising COVID-19 cases in India. Chinese traffic and factory activity are surpassing pre-pandemic levels.
The latest figures from the Commodity Futures Trading Commission on April 20 showed that long positions on crude oil futures on the New York Mercantile Exchange numbered 656,810 contracts, up by +11,218 contracts from the previous week (1,000 barrels for each contract). It is the first increase in positions after five consecutive weeks of decreasing.
Thus, it is interesting to see the disconnect between oil price movement and the reduction in speculative activities in the previous weeks, as investors decided to cash-in despite oil price raising.
It seems that investors tried to cash in the commodity oil because they make more money if they invest in other commodities since there are no steep fluctuations in oil prices movement, while other indexes and individual stocks are outperforming themselves.
• Faisal Faeq is an energy and oil marketing adviser. He was formerly with OPEC and Saudi Aramco. Twitter: @faisalfaeq