Hedge funds pooled for WTI oil before Texas Cold Snap

Portfolio managers further increased their long positions on the most traded oil contracts, with bullish bets focused almost entirely on the American WTI Crude benchmark, Reuters columnist John Kemp wrote in an analysis of the latest exchange data.

In the week through February 9, hedge funds and other money managers bought the equivalent of 33 million barrels in the six most traded oil futures and options contracts. The purchase was mainly concentrated in WTI Crude, where the long position increased the equivalent of 30 million barrels in the week until February 9, suggesting that hedge funds expected the price of US oil to rise as an explosion in the Arctic should extend as far as Texas, Kemp says.

Long positions on oil contracts have now increased for 14 consecutive weeks, which is the biggest and longest increase in bullish bets on oil since early 2019, according to Kemp.

Expectations of higher prices for WTI Crude materialized this week, and WTI Crude prices rose to above $ 60 per barrel for the first time in more than 13 months on Monday. The last time WTI Crude was traded above $ 60 was in early January 2020, before the pandemic started to worry traders and fund managers.

In the week through February 9, extreme positions above or near one-year highs were seen in several commodities, from crude oil and copper and corn products, said Ole Hansen, head of commodity strategy at Saxo Bank, on Monday , commenting on the commitments in the Traders report.

The combined net long position in Brent and WTI – the difference between high and low bets – rose to a 28-month high in 727,500 lots, the report showed.

That is still 33% below the March 2018 record of 1.1 million lots, says Hansen of Saxo Bank.

“Although short-term momentum indicators started asking for consolidation last week, long-short indices remain low, an indication that speculative length has more room to grow before trade starts to look congested,” he added.

By Tsvetana Paraskova for Oilprice.com

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