Kemp: Hedge Funds Get Bullish Again On Oil (Third Time Lucky?)



Kemp: Hedge Funds Get Bullish Again On Oil (Third Time Lucky?)
Hedge funds and other money managers are becoming bullish again about oil prices, for the third time this year.

Reuters

(John Kemp is a Reuters market analyst. The views expressed are his own)

LONDON, Aug 7 (Reuters) - Hedge funds and other money managers are becoming bullish again about oil prices, for the third time this year, as investors conclude the market is showing clear signs of rebalancing.

Hedge funds raised their combined net long position across the five major futures and options contracts linked to petroleum prices by 135 million barrels in the week to Aug. 1 (http://tmsnrt.rs/2fmeXOd).

The combined weekly increase in net long positions across Brent, WTI, U.S. gasoline and U.S. heating oil was the largest since Dec. 6, immediately after OPEC announced it was cutting production.

For the first time in months, the increase in the net long position was driven primarily by the creation of new long positions rather than covering of old short ones.

Hedge funds raised their combined long position across the five major contracts by 95 million barrels to 951 million barrels, the highest level since April 18.

Fund managers cut their combined short position across the five contracts by 40 million barrels to 239 million barrels, which was the lowest level mid-April.

Optimism Again

The same pattern of new long building and continued short covering was apparent across all the individual crude and fuel contracts.

Hedge funds raised their combined net long position in ICE Brent and NYMEX and ICE WTI by 99 million barrels to 649 million barrels.

Long positions were raised by 70 million barrels while short positions were trimmed by 30 million, according to regulatory and exchange data.

Fund managers have boosted their net long position by more than 290 million barrels since the end of June to the highest level for more than three months.

Funds now hold almost 4.5 long futures and options positions in Brent and WTI for every short position, up from a recent low of 1.95 at the end of June.

Fund managers have also built up a large net long position in U.S. gasoline, a smaller one in U.S. heating oil, and a record net long position in European gasoil.


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