Hedge funds staying bullish on oil amid trade truce, OPEC+ cuts

CALGARY (Bloomberg) – Hedge funds are approaching the end of the year more optimistic on global oil prices than they’ve been since May.

Their net-bullish wagers on Brent crude climbed for the ninth week in 10, reaching a seven-month high, data released Friday show. The U.S.-China trade truce and OPEC’s commitment to deeper cuts have pushed futures to their highest since an attack on Saudi facilities in September. But skepticism is also creeping in, with short-selling increasing the most since October.

“It’s a disaster waiting to happen,” said Bob Yawger at Mizuho Securities USA. “We’re seeing the largest net-long speculative position” in both West Texas Intermediate and Brent in seven months, he said.

Money managers’ Brent net-long position, or the difference between bullish and bearish bets, climbed 1% to 402,455 futures and options, the highest level since May, according to ICE Futures Europe data for the week ended Dec. 24. Long-only wagers rose 2.4%, while shorts increased 11%.

The U.S. Commodity Futures Trading Commission will release its report with wagers on West Texas Intermediate crude on Monday because of the Christmas holiday.

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