Market players are now sitting tight in crude oil as the price continues to float in the narrow range with key support to sentiments offered by voluntary/involuntary supply cuts. Upturn in commodity markets along with weaker dollar are also reflected in strong performance of EM and commodity currencies. As the bull trend in the oil market ripens, speculators are less willing to support it, shows COT data from the CFTC (weekly data on open positions of speculators and hedgers in the US). Growth of long positions slowed down from the end of April, and in the week of May 12 – May 19, the number even slightly decreased:

The price gain in that week was achieved mainly by continued decline in short positions:

The onslaught of buyers declined due to the fact that fundamental picture of the recovery in demand remains controversial, since the restart of economies follows a conservative scenario, while there is a risk of repeated lockdowns/extension in some countries. However, Russian Ministry of Energy expects that oversupply will disappear in June/July due to faster demand recovery. Drilling activity in the US continues to decline despite favorable price dynamics. The number of operating rigs decreased by 21 to 237. This is 65% less than in mid-March.

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