Hedge funds reduced long oil bets for the first time in six weeks, amid shrinkage of Chinese economy and boosted output of oil production in Russia to its highest level since the Soviet Union collapsed.
Russian oil output increased to a post-Soviet record in the previous month as producers took advantage of the cheap ruble to push ahead with drilling. The nation’s production of crude and condensate rose to 10.74 million barrels per day, one percent higher than the year earlier and topping a record reached in June, according to data from the Energy Ministry’s CDU-TEK unit.
OPEC, of which Saudi Arabia is the largest producer, decided in December and again in June to keep its production target unchanged at 30-million barrels a day. The group has exceeded this official target every month since May 2014.
Saudi Arabia boosted output to a record of 10.48 million barrels per day in June, according to the International Energy Agency. The kingdom pumped 10.3 million barrels daily last month as it exited its peak summer period for domestic demand, according to data compiled by Bloomberg.
China, on the other hand, failed to reverse an economic slowdown with five interest-rate reductions since November. The country’s growth will slow to 6.8 percent this year, below the government’s goal of seven percent, according to the median of economist estimates compiled by Bloomberg. China is the second largest crude-consuming nation after the U.S.
In addition, investors withdrew from United States Oil Fund (NYSE:USO) in September. That was the biggest withdrawal since April.