Hedge funds trim positions in crude but boost fuels

John Kemp is a Reuters market analyst. The views expressed are his own – Editor

For all the bullish chatter, hedge fund managers have become cautious about increasing their exposure to crude oil, though they are becoming increasingly optimistic about the outlook for refined fuels again.

Hedge funds and other money managers cut their combined net long position in the six most important futures and options contracts linked to petroleum by six million barrels in the week to April 24.

Net length was reduced in NYMEX and ICE WTI (-17 million barrels), Brent (-7 million) and European gasoil (-2 million) but increased in US heating oil (+7 million) and especially US gasoline (+13 million).

Portfolio managers have not really increased their net long position in WTI and Brent since the start of April and arguably not since the start of February, which is perhaps a sign they are now fully invested.

In contrast, fund managers have been adding net long positions in gasoline and heating oil, after cutting them in February and March, according to position records published by regulators and exchanges.

By April 24, funds held a record net long position in US gasoline equivalent to 111 million barrels as well as a net position in heating oil equivalent to 69 million barrels. (RTRS)