Oil Traders Seen as Less Optimistic over Easing Prospects

(eToro Blog) Whether they are less optimistic or simply realists, oil traders were neither convinced nor impressed by Ben Bernanke’s testimony yesterday in front of the U.S. Senate Banking Committee. At one point yesterday, NYMEX-traded oil was selling at $87.41 per barrel, before recovering slightly as a result of other more supportive factors.

Later today, the Energy Information Administration will release the weekly report on U.S. crude oil stockpiles, and traders are hopeful that the report will confirm the American Petroleum Institute’s forecast of a drop in inventories beyond recent analysts’ expectations. A small sampling of analysts had earlier predicted that crude inventories would drop by 1.2 million barrels against API expectations of a decline of 2 million; likewise polled analysts are forecasting gasoline stocks to rise by 1.2 million barrels while API’s analysis is predicting a drop of 116,000 barrels. Traders are also hopeful that the height of the U.S. summer season will bring with it an increase in demand.

While Fed easing isn’t a certainty, a slight bias toward a more accommodative stance is helping to support prices, as is the threat of supply disruptions in the Middle East. Certainly, expectations that the Chinese government won’t permit a hard landing and will tweak fiscal and monetary policy as needed is also providing a good deal of support.

On OpenBook, sentiment among oil traders is nearly evenly split between bulls and bears, with 51% buying against 49% selling. OpenBook trader kendo79 from Nigeria scalped several short positions earlier for himself and his three copiers; the trader also has 103 followers. The trader allocates 61% of his portfolio to commodities, split between a 44% allocation in gold and a 17% allocation in oil, which has returned 12.1% and 1.7% over the past month, respectively. The trader has also had a good record of profits; for the past week it was recorded at 4.1% and for the past month at 56.8%.

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