(Repeats Monday’s column without change in text. John Kemp is a Businesshala Markets analyst. Views expressed are his own)
LONDON, Oct 4 (Businesshala) – Rising oil prices and rising global shortages of coal, gas and electricity have prompted renewed buying from hedge funds and other money managers in oil-related derivatives contracts.
Portfolio managers bought the equivalent of 42 million barrels in the six most important petroleum futures and options contracts in the week to September 28, according to records published by regulators and exchanges.
A total of 170 million barrels have been purchased in the past six weeks, reversing more than half of the previous sales of 26.8 million barrels in the past ten weeks (tmsnrt.rs/2ZUULKJ)
For many fund managers, concerns about energy shortages in coal, gas, electricity and to a lesser extent oil have replaced earlier fears about a resurgence of coronavirus infections.
In the most recent week, buying was led by the creation of new bullish long positions (+41 million barrels) instead of closing the previous bearish short ones (-1 million).
The total number of short positions has fallen to its lowest level since the end of 2019 and is in the 20th percentile for all weeks since the start of 2013, as fears of a coronavirus hit in oil demand evaporated.
In the latest week, the fund increased positions in NYMEX and ICE WTI (+21 million barrels), Brent (+9 million), European gas oil (+11 million) and US gasoline (+3 million), placing them only slightly in the US. Reduced diesel (-3 million).
Across all six contracts, portfolio managers’ combined net long positions are 847 million barrels, up in the 76th percentile since 2013. Long positions outperform shorts in the 81st percentile by a ratio of 6.12:1.
Bullishness towards oil is led by middle distillates, where funds have earned net positions of 149 million barrels (87th percentile) and long positions compared to short positions by about 10:1 (95th percentile).
Strong global economic recovery focused in distillate-intensive manufacturing and freight fueled mid-distillate consumption, such as diesel and gas oils, throughout the year.
Now the distillate is getting an extra lift from global shortages of coal, gas and electricity, which could drive demand for diesel for heaters and generators this winter as well as reduce light fuel oil consumption at dual-fuel power plants. can increase.
– The lingering effects of Hurricane Ida tighten the global oil market (Businesshala, 30 September)
– Oil prices climb with little help from hedge funds (Businesshala, Sept 27)
– Worldwide energy shortages are reflected in rising coal, gas and oil prices (Businesshala, 24 September)
– Funds rebuild bullish oil position after hurricane outage (Businesshala, 20 September)
– Fund managers focus on middle distillate (Businesshala, September 13) (Editing by Jan Harvey)