Kemp: Hedge Funds Gamble For A Third Time On Oil Rebalancing
(John Kemp is a Reuters market analyst. The views expressed are his own)
LONDON, Aug 14 (Reuters) - "If at first you don't succeed, try, try, try again," goes the proverb used to encourage students.
Hedge fund managers are becoming bullish towards crude oil and refined fuels for the third time this year and must be hoping the signs of market rebalancing are real this time after early setbacks proved costly.
Hedge funds and other money managers raised their net long position in the three major futures and options contracts linked to Brent and West Texas Intermediate (WTI) to 705 million barrels in the week to Aug. 8. (http://tmsnrt.rs/2hYVRPj)
Fund managers have boosted their net long position in Brent and WTI by the equivalent of 347 million barrels over the six weeks since June 27, according to regulatory and exchange data.
Managers have nearly doubled their net long position in crude since the end of June and now have the largest net position since April.
Long positions outnumber their short positions by a ratio of 5.19:1, up from a recent low of just 1.95:1 on June 27, displaying a pronounced bullish bias.
But in the most recent week, the extra net length all came from the ICE Brent contract, where long positions were increased by 40 million barrels while short positions were trimmed by 19 million.
By contrast, net positions in NYMEX and ICE WTI were little changed, with long positions trimmed by 2 million barrels and short positions actually up by 1 million.
Increased net length in Brent is likely connected to a sudden tightening of the calendar spreads, which has seen Brent move from contango into backwardation between October and December 2017 (V7-Z7).
More generally, Brent calendar spreads have tightened much more than WTI since the last week of July, which has made Brent more profitable for hedge fund managers with long positions.
Increased bullishness towards crude has also been mirrored in hedge fund positions for U.S. gasoline and heating oil.
Hedge funds raised their net long position in gasoline by 2 million barrels to 47 million barrels in the week to Aug. 8. Fund managers are now more bullish on gasoline prices than at any time since the middle of February.
Portfolio managers also raised their net long position in U.S. heating oil by 6 million barrels to almost 25 million barrels.
12
View Full Article
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Weatherford CEO's Rebound Plan Relies On Getting Smaller
- Iran Says Oil Market Is Too Tight For US Zero Exports Target
- China's Squeezed 'Teapots' Eye Petchem Path To Riches
- Baker Hughes: US Drillers Add Oil Rigs For Second Week In Three
- Venezuela Hands China More Oil Presence, But No Mention Of New Funds
- Gunvor CEO Sees Russian Refining Capacity Taking Hit from Drone Strikes
- These Factors Helped Brent Oil Price Break Above $85
- Sinopec Engineering Posts Higher Annual Petrochemicals Revenue
- Imperial Pipeline in Winnipeg Goes Offline for Three Months
- Gaz System to Acquire Gas Storage Poland
- Subsea7 Secures Contract to Service Woodside's Trion
- Adnoc Inks Supply Deal for Ruwais LNG Project with Germany's SEFE
- EIA Boosts USA Crude Oil Production Forecasts
- TotalEnergies to Acquire TLCS Eyeing Bayou Bend CCS Project
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- EIA Drops 2024 Henry Hub Gas Price Forecast
- EIA and Standard Chartered Offer Up Latest Oil Price Predictions
- Red Sea Region Sees Another Watershed Incident
- Chevron Oil Project in Kazakhstan to Cost $48.5B
- OPEC Voices Encouragement after IEA Affirms Support for Oil Security
- Biden Govt Bares Strategy for Freight Charging, Hydrogen Fueling Infra
- Rystad Looks at the Buzz Around White Hydrogen
- Ukraine Hits Third Russian Refinery In Escalating Drone Strikes
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Is Peak Oil Demand Close?
- Vessel Sinks in Red Sea After Missile Strike
- JP Morgan, Standard Chartered Reveal Latest Oil Price Forecasts
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Rystad Forecasts Net Production of Top Permian Producers in 2024
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension