那么，究竟发生了什么?Affected by factors such as OPEC's plan to increase supply in December, the Brent crude oil price has dropped from over $90 in April to slightly below $70 in mid-September. Subsequently, with china's central bank's announcement of a "policy gift package" and increased turmoil in the Middle East, oil prices reversed, rising by over 9% for the week. On Tuesday, china's NDRC held a press conference, and as the Middle East tension did not escalate as expected, oil prices reversed again, dropping sharply by 5% on Tuesday.
In recent weeks, global oil prices have experienced drastic fluctuations, and each reversal is touching the nerves of investors.
On Monday this week, oil prices rose to over $80 per barrel, but on Tuesday, prices plunged by 5%. As of yesterday's close, Brent crude oil was trading at $77.06 per barrel, still below the $80 mark.
So what happened, exactly?
CTA catalyzed the decline in oil prices.
Going back a few months, the market experienced an epic algorithmic sell-off. The consecutive declines in oil prices are closely related to CTA (Commodity Trading Advisors) funds in algorithmic trading.
These funds analyze complex technical factors, such as the term structure of Brent and WTI prices, rather than trading based on macroeconomic or geopolitical fundamental factors.
Marex commodity portfolio manager and strategist Ryan Fitzmaurice said:
"CTA is the dominant force this year."
Earlier this year, the decline in US inflation led to many "sticky funds" fleeing the market in April and May. In addition, OPEC's plans to increase supply in December, combined with weak global demand, led to a sharp drop in Brent crude oil prices from over $90 per barrel in mid-April to slightly below $70 per barrel in mid-September.
Furthermore, trend followers actively bought in rising prices and actively sold in falling prices, accelerating this selling process.
"Risk premium" triggered the initial rebound.
Subsequently, as the People's Bank of China launched a "policy stimulus package" and tensions escalated between Israel and Iran, market sentiment shifted. Due to concerns about disruptions in Middle East oil supply, oil prices temporarily "reversed" sharply. JPMorgan commodity futures andOptions strategy.Analyst Tom Skingsley wrote in the report that the initial rebound was "largely caused by (reasonable) risk premiums".
Investors who have been waiting on the sidelines for several months have started to buy crude oil futures and call options to hedge their broader investment portfolios, thus breaking the momentum that was driving CTA selling.
Last week, Brent crude oil recorded its largest five-day trading gain in over a year, with a weekly gain of over 9%.
Former President of Koch Global Partners, Bouchouev, believes that,
"Investors are 'bullish,' but they are not really looking to buy. Before the US presidential election, they have no incentive to do so. Some are actively buying $100 call options as insurance, because no one really knows what will happen in the Middle East. What people do know is that if oil prices really rise to $100, the Fed's plans will be disrupted, and other assets will also be greatly affected."
The situation remains unclear, and oil prices may fall again.
However, in the past few days, there has been another dramatic change in the market. On Tuesday, the NDRC of China held a press conference and as tensions in the Middle East did not escalate as expected, oil prices experienced a "reversal" and dropped significantly by 5% on Tuesday.
JPMorgan analyst Skingsley released a report on Tuesday stating:
Before Israel takes clear actions, it is still difficult for us to make a judgment, but considering the magnitude of the rebound we have seen and the fact that it is largely caused by a (reasonable) risk premium and positioning, if Israel's response is "disappointing" (i.e. not affecting oil balance/focused on nuclear facilities), then there is still a significant downward space for oil prices now.
It is worth noting that on Tuesday, companies like TotalEnergies also joined the oil market sell-off, but for months, TotalEnergies has been switching from being a buyer to a seller every few weeks...
When will the next reversal be? It seems no one can say for sure.
Fitzmaurice of Marex expresses:
"It's an endless cycle. But CTA may not necessarily care about the prospects of OPEC or the Middle East. They are just trying to make money by leveraging momentum."
