Short positions in Brent crude by asset management companies exceed long positions for the first time in history

Crude oil futures saw a slight increase on Friday after the previous day's selling market, but ended the week with a decrease amid concerns about the global demand downturn and supply increase outlook following reports that Saudi Arabia is planning to proceed with production cuts in December.

According to the Financial Times, Saudi Arabia intends to increase production on December 1 even if prices continue to fall, with analysts noting that this would be a strong signal that OPEC+ is not planning further production cuts to push prices higher, disappointed by market share loss.

In Libya, conflicting factions have reached an agreement to appoint a new central bank governor, potentially opening the way to bring back over 0.5 million barrels of crude oil per day to the market after production and exports were hit by political deadlock.

China announced a new series of economic stimulus measures this week to revive a sluggish economy and curb a severe housing slump, pushing commodity prices higher, but analysts continue to be concerned about weakness in demand in the world's largest oil importing country.

Hurricane Helen, which directly hit Florida in the USA and then affected a wide range in the southeastern part of the country, has become another bearish factor for crude oil demand.

The basic outlook for crude oil is bleak. According to estimates by the US government, global inventories are expected to increase, with OECD countries' storage inventories projected to swell to 2.730 billion barrels by 2025.

November NYMEX crude oil futures (CL1:COM) closed up 0.7% on Friday but ended the week down by 3.9% at $68.18, while November Brent crude oil futures (CO1:COM) closed up 0.5% on Friday but fell by 3.3% for the week to $71.98/barrel.

Contrary to the overall energy market decline this week, NYMEX natural gas futures saw an increase. November futures (NG1:COM) closed up 5.4% on Friday, reaching a 14-week high of $2.902/MMBtu, marking a 6.7% weekly increase and the fourth consecutive weekly gain.

Sentiment in the crude oil market is extremely bearish. Reports indicate that in the past two weeks, money managers' short positions in Brent futures have surpassed long positions for the first time in history.

According to Bank of America's September survey, fund managers have reduced their allocation to commodities to the lowest level in seven years.

However, extreme positions increase the risk of a sharp reversal, but there are potential bullish factors in the market, such as China's economic stimulus measures and the Federal Reserve's aggressive rate cuts.

Energy stocks represented by the Energy Select Sector SPDR Fund ETF (NYSEARCA:XLE) ended the week down by 1.7%.

Top 10 stocks that rose in the energy and natural resources sector:

Eco Wave Power (WAVE) +42.3%, Hallador Energy (HNRG) +41%, MP Materials (MP) +32.4%, Lithium Americas Argentina (LAAC) +30.6%, Centrus Energy (LEU) +28.2%, Piedmont Lithium (PLL) +22.7%, Zim Integrated Shipping (ZIM) +20.8%, Ivanhoe Electric (IE) +20.6%, Hudbay Minerals (HBM) +18.6%, Companhia Siderurgica Nacional (SID) +18.2%.

Top 5 decliners in the energy and natural resources sector:

Zeo Energy (ZEO) -24.3%, Stardust Power (SDST) -22.8%, KLX Energy Services (KLXE) -13.9%, Talos Energy (TALO) -11.1%, Weatherford International (WFRD) -11%.