Money managers cut bets on rising oil prices
NEW YORK: Money managers once again cut bets on rising oil prices — the longest streak of declines since 2013.
As investors digest the signals of increasing supplies from Saudi Arabia and Russia, and the United States is said to back the idea, futures have slumped nine per cent in less than three weeks. Total positioning on West Texas Intermediate (WTI) is the lowest in almost a year ahead of an Organisation of the Petroleum Exporting Countries meeting in Vienna on June 22-23.
Meanwhile, US output has risen so much that it’s overwhelming pipeline infrastructure and forcing drillers at the prolific Permian region of West Texas and New Mexico to sell their crude at growing discounts.
“There is potentially more volume coming,” said Ashley Petersen, lead oil analyst at Stratas Advisors.
On the WTI side, “investors are finally catching up with reality. There is a lot of production online”.
Hedge funds reduced their WTI net-long position — the difference between bets on a price increase and wagers on a drop — by 3.3 per cent to 313,450 futures and options during the week ended June 5, the lowest level since October last year, according to the US Commodity Futures Trading Commission.
Money managers were also less bullish on Brent crude, petrol and diesel.