LONDON: Hedge funds cut their bullish positions in petroleum last week for the third week running, though the rate of selling was slower than in previous weeks and positions are broadly unchanged since the middle of March.
Hedge funds and other money managers sold the equivalent of 8 million barrels in the six most important petroleum futures and options contracts in the week to May 25, according to exchange and regulatory reports.
Small sales in Brent (-12 million barrels), US gasoline (-6 million) and European gas oil (-6 million) were partly offset by small buying in NYMEX and ICE WTI (+10 million) and US diesel (+6 million).
Total sales over the last three weeks have amounted to 74 million barrels, partially reversing purchases of 102 million barrels over the previous four weeks. But the combined position across all six contracts has been basically stable in a range of 850 million barrels +/- 50 million barrels for 10 weeks since the middle of March. Portfolio managers are bullish on oil prices: the combined position is in 75th percentile for all weeks since the start of 2013.
Bullish long positions outnumber bearish short ones by a ratio of just under 5:1, in the 66th percentile for all weeks since 2013. Funds continued to anticipate further price increases, even though benchmark Brent prices were already close to their highest since the first wave of coronavirus spread around the world in March 2020. The upward bias is being underpinned by output restraint by OPEC+ and US shale producers, coupled with a strong economic recovery in North America and Western Europe, and a rebound in oil consumption.
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