Money managers continued to liquidate long positions in the petroleum futures last week, but the pace of rising shorts has slowed after the early market panic about the impact of the coronavirus outbreak on oil demand.
Portfolio managers reduced their net long position—the difference between bullish and bearish bets—on WTI Crude by 7 percent in the week to February 11, according to the latest data from the U.S. Commodity Futures Trading Commission, as carried by Bloomberg.
Despite a slowdown in shorts on WTI, the overall positioning in the contract remains the most bearish since November, according to Bloomberg estimates.
In the week to February 11, money managers sold the equivalent of 74 million barrels in the six most important petroleum contracts, exchanges data compiled by Reuters market analyst John Kemp showed on Monday. Hedge funds were still net sellers of oil futures last week, but the pace of selling has slowed after the panic-selling in the two previous weeks.
In the week to February 11, the combined net-long position in WTI Crude and Brent Crude was cut by 78k lots to a three-month low at 406k lots, or the equivalent of 406 million barrels, Ole Hansen, Head of Commodity Strategy at Saxo Bank, said on Monday.
“Since the January 10 peak at 714k lots the combined net-long has now been cut by 43% on a combination of the gross-short rising by 90% to 212k lots while the gross-long has been cut by 25% to 618k lots,” Hansen noted.
Speculators continued to liquidate their longs over the latest reporting week through last Tuesday, ING strategists said on Monday.
“Given the rally in the market since last Tuesday, the current net-long is likely larger than it was as of last Tuesday,” ING strategists Warren Patterson and Wenyu Yao said.
Last week, oil prices recorded their first weekly gain since early January as the market shook off the coronavirus panic and hoped for a Chinese stimulus in case the virus outbreak considerably slows down the economy.
Yet, market sentiment is still bearish given the coronavirus hit to oil demand this quarter.
By Tsvetana Paraskova for Oilprice.com
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