(Repeats Tuesday’s column without change in text. John Kemp is a Businesshala Markets analyst. Views expressed are his own)
LONDON, Nov 16 (Businesshala) – Petroleum futures and options continued to see light gains by hedge funds and other money managers last week, as oil prices eased from a three-year high in late October.
Portfolio managers sold the equivalent of 9 million barrels in the six most important contracts in the seven days to November 9, according to records from ICE Futures Europe and the US Commodity Futures Trading Commission.
The funds have been net sellers in four of the past five weeks, reducing their combined position from a total of 77 million barrels (9%) to 794 million barrels (9%).tmsnrt.rs/3qICX0M,
But almost all of the adjustments have come from reductions in previous bullish long positions (-70 million barrels), with a smaller number of new bearish openings (+7 million) corresponding to profit-taking after a large rally.
In the most recent week, hedge funds were sellers of Brent (-10 million), US gasoline (-5 million) and US diesel (-9 million), but NYMEX and ICE were sellers of WTI (+12 million) and European gas oil (+ 4 million).
WTI and gas oil have been the strongest elements of the complex in recent months, expected to benefit from continued production restraint by US shale producers and depletion of natural gas stocks in Europe.
The hedge fund community is essentially upbeat about the outlook for oil, with combined long positions down 6:1 in the 79th percentile for all weeks since 2013.
But with prices already at multi-year highs and positions stretching, petroleum contracts are no longer attracting much new purchases. Instead they are being snatched away by frequent, gentle sales as managers lock in some profits.
– Oil Positions of Profit-Taking Hit Hedge Funds (Businesshala, Nov 8)
– Depleted US oil reserves left the market in the grip of shock (Businesshala, 4 November).
– Hedge funds put the brakes on buying oil as concerns over the economy (Businesshala, November 1)
– Rally in US oil futures driven by Cushing stock draw (Businesshala, October 28) (Editing by Jan Harvey)