Energy Report: The Hedge Funds Are Back

All of a sudden the hedge funds love oil again. Headphones that in recent weeks into abandon the oil complex as they worried that the resumption of Iranian nuclear talks would bring a flood of oil to the marketplace. Yet last week based on signs that demand in the United States and the world was coming back in a way the hedge funds boosted their net long position to the highest level in nearly three years. That helps supports the oil market late last week along with reports that the Biden administration was considering giving in to pressure from refiners to reduce ethanol in gasoline. Reuters had reported that the U.S. EPA was considering ways to provide relief to U.S. cell refiners from biofuel blending mandates as the price of corn has exploded as well as the price of soybeans. Talk of the waivers caused the grain market to sell off and the oil market to rally as we would use left AG hindwing and more oil. That about-face by the Biden administration seems to not be in keeping with his green energy cuts but at the same time, he is a political animal, and sometimes politics getting get ahead of the planet.

Pump Jack, Oilfield, Oil, Fuel, Industry, Petroleum

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The other major factor that was keeping hedge funds out of the market was the possibility of an Iranian nuclear deal. The Biden administration has been falling all over itself trying to get Iran back to the table for these talks in basically begging them to get back into the ill-fated 2015 agreement. There have been mixed reports of progress coming out of the talks. Oil prices sold off sharply after a report that sanctions on Iranian oil were lifted. That was later clarified that they were lifting sanctions on some Iranian oil entities and individuals. Now over the weekend, Bloomberg News reports that Iran's lead envoy said that a deal was unlikely before the presidential election in his country. President Hassan Rouhani who negotiated the original deal in 2015 is due to leave office in August after serving two terms he is widely expected to be replaced by Ebrahim Raisi a cleric generally seen as hostile as engaging with the US according to Bloomberg News. Most oil traders realized that if Raisi is in power that the likelihood of an Iranian nuclear deal getting done is small.

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