Trader Tells Rigzone Why Crude Caught a Bid Tuesday

In an exclusive interview with Rigzone on Tuesday, Rebecca Babin, a senior equity trader for CIBC Private Wealth in New York, said crude was “bid” yesterday morning “on a mix of fundamentals, geopolitics, and positioning”.

“The physical market remains tighter than expected for this time of year, with time spreads holding up well,” Babin told Rigzone.

“In addition, OPEC exports have been undershooting expectations while demand numbers have been revised higher, giving more credence to strong underlying fundamentals,” Babin added.

“Ukrainian strikes are beginning to impact Russian exports, adding to the geopolitical risk premium, and recent comments on potential Russian sanctions are further reinforcing that theme,” Babin continued, noting that, “at the same time, hopes for a ceasefire are fading”.

Babin told Rigzone that positioning has also reset meaningfully.

“Net long WTI exposure is at levels we haven’t seen since 2007-08, driven by twice as many new shorts as longs last week,” Babin said.

“Taken together, I think the move higher in crude is justified, even against a softer macro backdrop,” Babin added.

Rigzone has contacted OPEC, the Department of Information and Press of the Russian Ministry of Foreign Affairs, and the Press Office of the Ministry of Foreign Affairs of Ukraine for comment on Babin’s statement. At the time of writing, none of the above have responded to Rigzone.

In a BMI report sent to Rigzone by the Fitch Group late Tuesday, BMI, a unit of Fitch Solutions, projected that the Brent crude oil price will average $68 per barrel in 2025, $67 per barrel in 2026, and $70 per barrel across 2027, 2028, and 2029.

A Bloomberg consensus included in the report projected that Brent will average $68 per barrel this year, $65 per barrel next year, and $70 per barrel across 2027, 2028, and 2029. BMI highlighted in the report that it is a contributor to the Bloomberg consensus.

“This month, we are leaving our Brent crude oil price forecast unchanged at an annual average of $68 per barrel in 2025 and $67 per barrel in 2026,” BMI analysts said in the BMI report.

“Meeting our price target requires a rest of year average of around $63 per barrel, significantly below the $70 per barrel average seen in the year to date,” they added.

“The front-month contract is currently trading at around $67 per barrel, and we anticipate price declines in Q4, as supply rises and robustly outpaces demand,” they continued.

“Fundamental market weakness will spill over into the new year, before softening production growth and an acceleration in global economic activity support a partial recovery in Brent in H2 2026,” the BMI analysts went on to state.

In the report, the BMI analysts said prices have remained relatively well supported over the northern hemisphere summer but added that several high-frequency indicators are showing signs of strain.

“Market positioning is turning more bearish, with the ratio of long to short positions held by managed money in Brent crude reaching 2.5 as of late August, down from 3.5 as of end-July, as sentiment sours,” the analysts noted in the report.

“Meanwhile, the futures curve has shifted deeper into contango, signaling expectations of a looser market balance,” they added.

“At the same time, the spread between physically-settled wet barrels and financially-settled paper barrels has been narrowing, pointing to an emergent softening in the underlying physical fundamentals,” they continued.

The analysts warned in the report that this trend is likely to intensify as we move into the shoulder season.

“Strength in the downstream sector has been a key source of support for prices over recent months,” the analysts said.

“Run rates have reached record highs, with higher throughput spurred by healthy crack spreads. However, refining margins will likely be squeezed over the coming months as global demand growth wanes and refiners ramp up their maintenance work,” they added.

“This, in turn, will lower throughput, reducing the call on crude,” they said.

The analysts went on to state in the report that oil demand is seasonally stronger over summer in the northern hemisphere and weakens over late Q3 and into early Q4.

“This will exacerbate the cyclical slowdown in growth, further loosening the market fundamentals and exerting downward pressure on prices,” they warned.

“We hold a fairly bearish outlook on demand, forecasting global growth of just 0.7 percent year on year in 2025, rising to 1.0 percent in 2026,” they added.

To contact the author, email andreas.exarheas@rigzone.com