Markets hate uncertainty, the old saying goes. So what to make of today’s oil market, where uncer- tainty has reached a fever pitch? Indeed, a state of “maximum uncertainty” has put most specula- tive investors on the sidelines, unsure how to play the oil market amid a growing list of competing forces - trade issues, geopolitical tensions, attacks on Mideast oil infrastructure - that could sur- prise and upend positions on a whim. For those brave enough to take positions, the recent bets have been on lower prices. Exchange data across Brent and Nymex WTI crude oil contracts show spec- ulators added a gross 74 million barrels in bets on falling prices starting just after the devastating Sep. 14 attacks on Saudi oil infrastructure - the largest short position since the December 2018 price drop (PIW Sep.20’19). The quick restoration of Saudi oil production, combined with the gloomy outlook for the global economy - and thus oil demand - as well as robust non-Opec supply growth and ample inven- tories, have led some to believe that prices only have further to fall.
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