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Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

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Hedge Funds Cut Bullish Bets On Oil Amid Profit-Taking

  • In the week to October 12, hedge funds sold the equivalent of 16 million barrels in the six most active petroleum-related contracts
  • Portfolio managers have started to take profits as oil hits multi-year highs

Portfolio managers reduced their bullish bets on oil in the latest reporting week as they moved to take profits amid prices hitting multi-year highs.

In the week to October 12, hedge funds sold the equivalent of 16 million barrels in the six most active petroleum-related contracts, according to data from futures exchanges cited by Reuters’s market analyst John Kemp.

Having amassed a large net long position—the difference between bullish and bearish bets—over the past eight weeks, money managers took some profits in the week to October 12, reducing their long positions, especially in Brent Crude, which has traded at above $80 since the beginning of October.

However, the WTI Crude futures saw a third consecutive week of rising long positions. The U.S. benchmark hit $80 a barrel in the week to October 12.

The selling in Brent was one of the drivers of funds reducing their bullish bets on commodities by 4 percent to 2 million lots in the week, said Ole Hansen, Head of Commodity Strategy at Saxo Bank.

“The latest positioning data shows that money managers increased their net long positions in NYMEX WTI by another 10,448 lots over the last reporting week to 326,605 lots, 3rd consecutive week of longs build-up,” ING strategists Warren Patterson and Wenyu Yao said on Monday, commenting on the latest Commitment of Traders (COT) reports.

“On the other hand, speculative activity in ICE Brent was soft and managed money net longs dropped by 31,756 lots over the last reporting week with the move predominantly driven by longs liquidation. Managed money gross longs dropped by 31,018 lots over the week on profit booking at higher prices,” the strategists said.

After October 12, oil prices continued to rally, with WTI Crude trading above $83 a barrel on October 18, and Brent Crude above $85, as the global energy crisis continues to brighten the outlook for oil products to replace record-priced natural gas and coal.

By Charles Kennedy for Oilprice.com


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