Brent rally runs out of fuel

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Investors’ medium term market confidence towards Brent crude oil drops surprisingly significant. That means mounting trouble for markets as investors’ willingness to sell is on the rise. The sentix indicator hints to falling crude oil notations.

The latest sentix Strategic Bias for Brent crude oil drops surprisingly significant. The sentix indicator measures the medium term market confidence on a six-month view of surveyed investors and indicates the general willingness to buy or sell a security. As a matter of fact, the since October 2015 rising Strategic Bias has led investors to a massive built-up of long-bets on rising Brent oil prices. Thus, the latest rise in investors’ willingness to sell gives reasons to worry (see chart). To a great extend the price of crude oil is determined by the commitment of traders. In turn, develop-ments of the sentix Strategic Bias usually precede changes in the commitment of traders. A worsening in investor confidence tends to result in falling Brent prices.

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Furthermore, bullish investors will find it hard to build up additional long positions. Hence, the recent crude oil rally should run out of fuel soon as investors tend to secure hard earned profits.

Background

 
The sentix Strategic Bias (investors’ six-month market confidence) is polled on a weekly basis since 2001 as part of the sentix Global Investor Survey. It reflects the strategic view of market participants as well as their basic convictions and perceptions of value for a given market. As this indicator represents investors’ general willingness to buy or sell it should not be interpreted as a contrarian signal. Rather it is usually leading the market by several weeks.
The current sentix Global Investor Survey was conducted from 10-Mar 16 to 12-Mar 16. 1072 individual and institutional investors took part in it.

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