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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Hedge Funds Increase Bullish Bets On Oil

Money managers have accelerated buying in the most important petroleum futures and options contracts, betting that oil prices will increase later this year as economies reopen and travel and fuel demand rise.

In the week to May 4, hedge funds bought the equivalent of 40 million barrels in the most important contracts, led by increased bullish bets on WTI Crude and Brent Crude, according to data from exchanges compiled by Reuters columnist John Kemp.

This was the fourth week in a row in which portfolio managers have added long positions in oil futures.

In the week to April 27, hedge funds added the equivalent of 30 million barrels in the six most important petroleum futures and options contracts. At the time, this was the most bullish position in the oil complex in more than two and a half months, with the net long in crude oil futures jumping to the highest in six weeks.

In the past few weeks, signs of oil demand recovery trumped bearish news such as India’s records in daily coronavirus cases as market participants expect the reopening of major developed economies to lead to increased travel and fuel demand for the rest of the year.

Both Brent and WTI saw increased net long position—the difference between bullish and bearish bets—in the week to May 4. The increased net long “was predominantly driven by fresh longs entering the market,” ING strategists Warren Patterson and Wenyu Yao said on Monday.

Oil prices posted weekly gains in the past two weeks, for a first such back-to-back weekly gain in nearly two months.

Bullish demand outlooks thanks to the reopening in the United States and Europe and draws in U.S. crude oil inventories have mostly prevailed over the concerns about a slowdown in oil demand in the world’s third-largest oil importer, India.

By Tsvetana Paraskova for Oilprice.com

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