How the Oil Market Bounced Back From a Year of Crisis

Here is why U.S. crude prices have roared back above $60 a barrel from a low of minus $37.63 a barrel last April. Investors Take a Back Seat Traders and analysts say supply and demand, rather than speculation, have underpinned the rally so far. The ratio of positions held by money managers in WTI futures and options contracts who expect oil prices to rise, versus those who expect them to fall, is below levels seen during the last big run-up in oil prices in 2018. That suggests investors aren’t in the driving seat. Analysts say that may change if money managers pile into the oil market to bet on the reopening of economic activity. Supplies Shrink Oil stockpiles that ballooned at the start of the pandemic have shrunk thanks to output cuts by OPEC, its partners and companies in the U.S. and elsewhere. Concerned that another round of lockdowns would derail efforts to rebalance the market, Saudi Arabia made an additional cut in January. Analysts say the winter storm in Texas, which briefly knocked out almost half of U.S. crude production, will also help to drain global supplies. Global demand now exceeds production by 2.8 million barrels a day, […]

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