Hedge funds jump into bullish oil bets on tight supply signals
Hedge funds boosted bullish bets on crude the most since June amid tightness in US markets and geopolitical risks, just before signs that OPEC+ will consider another major output boost sank futures this week.
Money managers increased their combined net-long position on West Texas Intermediate and Brent by 54,183 lots to 245,650 lots in the week through Tuesday, according to data from ICE Futures Europe and the US Commodity Futures Trading Commission compiled by Bloomberg. That was the biggest increase since mid-June, lifting the net long WTI position off of an 18-year low.
The bullish turn came right before oil prices started sliding midweek amid reports OPEC and its allies may look at bringing back more output ahead of schedule. All eyes are now on the alliance’s Sunday video conference, and some investors already are positioning for Brent to plummet below $60 a barrel if there’s another large hike.
Before the OPEC+ speculation, oil prices had gotten a lift from signs US efforts to pressure Moscow to make peace in Ukraine were proving unsuccessful, diminishing the prospect that Russian crude would become more widely available. German Chancellor Friedrich Merz further dimmed investors’ expectations for peace, saying that a meeting between Ukrainian President Volodymyr Zelenskiy and Russia’s Vladimir Putin — seen as a crucial step toward a ceasefire — is off the table.
Meanwhile, US government data released last week showed that stockpiles at the key storage hub in Cushing, Oklahoma, fell for the first time in eight weeks. At the same time, national crude inventories declined by 2.4 million barrels, leading timespreads to widen in their backwardated structures and pointing to enduring tightness in domestic markets.
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