LONDON, July 19 (Reuters) – Falling oil prices, triggered by concern over a third wave of the novel coronavirus and increased confidence that OPEC + will boost production, has given portfolio managers the opportunity to realize profits on tactical short positions.
Hedge funds and other fund managers bought the equivalent of 24 million barrels in the six largest oil futures and options contracts in the week to July 13 (https: // tmsnrt. rs / 36MgxAw).
The purchase partially offset larger sales of 63 million barrels the week before, according to position records released by ICE Futures Europe and the US Commodity Futures Trading Commission.
But most of the purchases consisted of buybacks of previous short sales (+15 million barrels) rather than opening new long positions (+8 million), implying that they were motivated by catches. profit after falling prices.
The purchases were split between NYMEX and ICE WTI (+11 million barrels), Brent (+9 million), US gasoline (+4 million) and US diesel (+3 million), but there were diesel sales European (-4 million).
Overall, the portfolio managers remain bullish, with the net position (901 million barrels) in the 81st percentile and the ratio of long to short positions (5.74: 1) in the 77th percentile for all weeks since 2013.
But there have been few additional strategic buys since mid-February, when benchmark Brent futures were already trading at $ 63 a barrel, down from around $ 72 in mid-July.
As a result, the net position on the six contracts has hovered around 875 million barrels +/- 75 million barrels over the past five months with no discernible trend.
Optimism over the restriction of production by OPEC + and US shale producers and the resulting reduction in inventories have been tempered by concerns about the resurgence of coronavirus cases and their impact on the resumption of consumption of oil.
This basic balance has remained intact through all the diplomatic dramas over how quickly OPEC + would increase production and disputes over baselines for production allocations.
– Hedge funds took profits as US oil prices hit their highest level in more than six years (Reuters, July 12)
– US oil stocks tighten (Reuters, July 9)
– Hedge funds await OPEC + decision on oil production (Reuters, July 5) read more
– Fall in US crude stocks catches the attention of hedge funds (Reuters, June 28) read more
Editing by Barbara Lewis
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