Portfolio managers further increased their long positions in the most traded petroleum contracts, with bullish bets focused almost entirely on the U.S. benchmark WTI Crude, Reuters columnist John Kemp wrote in an analysis of the latest exchange data.
In the week to February 9, hedge funds and other money managers bought the equivalent of 33 million barrels in the six most traded oil futures and options contracts. The buying was mostly concentrated on WTI Crude, where the long position increased by the equivalent of 30 million barrels in the week to February 9, suggesting that hedge funds expected the price of U.S. oil to rise as an Arctic blast was expected to extend as far as Texas, Kemp says.
The long positions in petroleum contracts have now increased for 14 consecutive weeks, which is the longest and largest rise in bullish bets on oil since early 2019, according to Kemp.
The expectations of higher WTI Crude prices materialized this week, and WTI Crude prices rallied to above $60 per barrel for the first time in more than 13 months on Monday. The last time WTI Crude traded above $60 was in early January 2020, before the pandemic started worrying traders and fund managers.
In the week to February 9, position extremes above or near one-year highs were seen across multiple commodities from crude oil and products to copper and corn, Ole Hansen, Head of Commodity Strategy at Saxo Bank, said on Monday, commenting on the Commitments of Traders report.
The combined net long position in Brent and WTI – the difference between bullish and bearish bets – rose to a 28-month high at 727,500 lots, the report showed.
This is still 33 percent below the record of 1.1 million lots from March 2018, Saxo Bank’s Hansen says.
“While short-term momentum indicators began calling for consolidation last week, the long-short ratios remain low, an indication that the speculative length has further room to grow before the trade begin to look crowded,” he added.
By Tsvetana Paraskova for Oilprice.com
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