CALGARY — Despite a rapid spike in oil prices, investors are watching the rally from the sidelines as they ponder whether to jump in amid a broad rally in global energy stocks, led by the Canadian energy index.
“This is definitely not a crowded trade,” said Michael Tran, RBC Capital Markets managing director, global energy strategy, about rising crude prices.
Unlike the latter half of 2018, when bets that global oil prices would rise outnumbered short contracts by nine to one, funds are being more conservative during the current oil price rally. Tran said the number of long contracts for crude currently outnumber the shorts by just four to one.
“Everybody still remembers getting burned in Q4 of last year,” Tran said, describing the bullish investors on the sidelines as “wounded bulls” who were singed by a 16 per cent plunge in oil prices during the period.
But a renewed rally has once again raised investors’ hopes, amid higher demand and tightening supply. Crude oil prices surged Monday after the U.S. government said it would not extend or re-issue waivers for oil importing countries like China and India to continue purchasing oil from Iran.
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