(John Kemp is a Reuters market analyst. The views expressed are
* Chartbook: https://tmsnrt.rs/3y3qUMS
LONDON, May 10 (Reuters) - Hedge funds boosted their
position in petroleum for the fourth week running, as
bullishness about oil consumption and prices rebounded after the
setback in March.
Hedge funds and other money managers purchased the
equivalent of 40 million barrels in the six most important
petroleum futures and options contracts in the week to May 4.
Portfolio managers have bought 102 million barrels over the
last four weeks, reversing sales of 113 million barrels between
the middle of March and early April (https://tmsnrt.rs/3y3qUMS).
In the latest week, there were purchases across the complex,
led by NYMEX and ICE WTI (+14 million barrels) and Brent (+11
million) but also European gasoil (+7 million), U.S. gasoline
(+6 million) and U.S. diesel (+1 million).
Long positions outnumber shorts by a ratio of nearly 6:1,
almost back to the previous peak in mid-February, and in the
80th percentile for all weeks since the start of 2013, implying
a broad consensus that prices are headed even higher.
The rate of hedge fund buying is accelerating and widening
to include both crude and refined fuels, consistent with growing
confidence about an economic recovery and cyclical upturn in
Rising coronavirus infections in India and a delayed
resumption in passenger aviation are no longer deterring oil
bulls, with buyers anticipating consumption will nonetheless
increase later in the year.
In recent weeks, the number of rigs drilling for oil in the
United States has also flattened out, implying a slower increase
in shale production over the second half of the year, helping
support prices at a higher level.
- U.S. petroleum stockpiles normalise after pandemic surge
- Fund oil buying resumes as global manufacturing surges
(Reuters, May 4)
- Inflation-tolerant Fed will boost commodity prices
(Reuters, April 30)
(Reporting by John Kemp; Editing by Susan Fenton)