The Saudis have ramped up production above 10 million bpd for the past few months. Saudi Arabia told OPEC that its June production of 10.564 million bpd was a record, exceeding a previous all-time high set in 1980. Bloomberg reported that Saudi Arabia’s commercial petroleum stockpiles increased to 320 million barrels, the highest since at least 2002, from 319.5 million barrels in June, according to data on the Riyadh-based Joint Organisations Data Initiative's website in late September.
As of September 29, there are 481,485 long positions of non-commercial contracts of light sweet crude oil futures, traded on the New York Mercantile Exchange by hedge funds and dealers, a decrease of 7,719 long positions from last week, according to the Commitment of Traders (COT) data released by the Commodity Futures Trading Commission
(CFTC) each Friday.
This is compared to about 229,757 short positions, a decrease of 18 short positions from last week where light sweet crude oil contracts are traded in units of 1,000 barrels. Hedge funds and dealers have decreased their net long positions by about 7,701 contracts, as crude oil prices reached a key inflection point last week.
Technically, the crude oil price has been moving in a descending wedge chart pattern since June. In late August, Venezuela asked OPEC for an emergency meeting, which sent the crude oil price soaring and broke out the descending wedge. Since then, the crude oil price has been moving in a symmetrical triangle chart pattern as traders can’t decide in which direction the crude oil price will be moving next.
Hedge funds decided to take the crude oil price up on Tuesday following the report about the Russia and Saudi talks. The crude oil price continued to surge to an intraday high of $49.71 a barrel on Wednesday in anticipation of bullish EIA data but had a trend reversal to close at $47.81 a barrel, below the previous day's close of $49.04 a barrel.
The double-top reversal chart pattern has now emerged. It looks more likely that the crude oil price will eventually break down and head back to retest the $44.50 per barrel level, as the global crude oil supply continues to build. A confirmed double-top reversal chart pattern could send the crude oil price back to the $40 a barrel level.