Hedge funds are increasingly optimistic about oil's short-term price outlook as geopolitical tensions and stricter US sanctions on Russia and Iran threaten to tighten global supply. The upward shift in the WTI forward curve and a less-negative WTI risk reversal indicate a more bullish sentiment in the options market. Additionally, the rising CFTC speculative net long futures position suggests that investors are betting on higher oil prices in the first quarter of 2025.
The potential for a supply crunch is heightened by geopolitical conflicts in the Middle East and delays in OPEC+ unwinding production cuts, which could further constrain supply. These factors contribute to a more favorable environment for oil prices, as market participants anticipate tighter supply-demand dynamics.
As of 22:43 on January 15, the price of Brent crude oil (CO1) stands at $82.27, slightly up from its last close of $82.03. This reflects the market's response to the evolving geopolitical landscape and the anticipated impact on global oil supply.