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Tags: raoul pal | oil | crude | global macro investors

Global Macro Investor's Raoul Pal: Oil Will 'Massively Disappoint'

(DPC)

By    |   Wednesday, 01 February 2017 10:46 AM EST

Raoul Pal, a former hedge-fund manager and founder of the Global Macro Investor, a macroeconomic research service, warns savvy investors that the crude market may very well leave a lot to be desired this year.

Pal told CNBC that speculative positioning on oil futures contracts is the "biggest in all of history."

He said the price of crude and the U.S. dollar have been rising and falling in tandem recently (historically a rare pattern between the two as a stronger dollar is generally a negative for dollar-denominated crude), CNBC.com explained.

"And so it makes me think that if speculators are record long, and it's diverging from what the dollar's doing, and I think the dollar goes up, then I think on balance, over this year, crude will massively disappoint to the downside," Pal said.

OPEC and other producers, including Russia, have agreed to a production cut of nearly 1.8 million barrels per day to alleviate a global supply glut of crude, but U.S. production has risen so far this year, giving some oil traders pause.

The dollar will continue to appreciate this year, rising another 25 percent against a basket of major currencies, due to President Donald Trump's protectionist trade policies, Pal forecast.

All in all, "the probability is that crude oil will go lower, not higher, this year," he said.

Benchmark U.S. crude lost 72 cents, or 1.4 percent, to $52.43 a barrel in New York. Brent crude, which is used to price international oils, gave up 63 cents, or 1.1 percent, to $55.07 a barrel in London. The dollar fell to 113.80 yen from 115.09 yen, the AP reported.

Oil has fluctuated above $50 a barrel since 11 nations including Russia last month joined with the Organization of Petroleum Exporting Countries to trim supply. While Saudi Arabia says more than 80 percent of the targeted cuts have been implemented since the deal took effect on Jan. 1, the International Energy Agency predicted a gain in U.S. shale output as prices rise, Bloomberg reported.

"It looks like we are still moving in response to Friday’s rig data," Gene McGillian, manager of market research for Tradition Energy in Stamford, Connecticut, said by telephone. "U.S. crude production is above 8.9 million barrels and rising while the rig count grows. It looks like North American, particularly U.S. production, will eat into the OPEC cuts."

(Newsmax wire services contributed to this report).

© 2022 Newsmax Finance. All rights reserved.


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Raoul Pal, a former hedge-fund manager and founder of the Global Macro Investor, a macroeconomic research service, warns savvy investors that the crude market may very well leave a lot to be desired this year.
raoul pal, oil, crude, global macro investors
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2017-46-01
Wednesday, 01 February 2017 10:46 AM
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