Portfolio managers increased their bullish bets on crude oil futures and options in the week to October 20 by the most since April, according to the latest commitment of traders report with data from exchanges.
The jump in longs in Brent Crude and WTI Crude coincided with increased market speculation earlier this month that OPEC+ would likely postpone the easing of the ongoing production cuts until global oil demand strengthens, Reuters columnist John Kemp commented on Monday.
In the week to October 20, money managers bought the equivalent of 55 million barrels of oil in the six most important petroleum contracts, with the buying focused heavily on WTI Crude and Brent Crude, according to Kemp's estimates from the commitment of traders (COT) report.
The buying in the crude contracts was not only short covering but also establishing new long positions, the report showed.
The overall net long position-the difference between bullish and bearish bets-in crude futures and options has now jumped to the equivalent of 464 million barrels, up from a low of 380 million at the beginning of the month, Reuters' Kemp noted.
According to estimates from ING strategists Warren Patterson and Wenyu Yao, the increased bullish bets in Brent futures and options was mostly the result of fresh buying, while the rise in long positions in WTI was driven fairly evenly by both fresh buying and short covering.
"Speculators added the most crude oil length since April with the combine net long in Brent and WTI crude oil rising by 58,453 lots to 472,390 lots, a seven-week high," Ole Hansen, Head of Commodity Strategy at Saxo Bank, said on Monday.
"The increase occurred during a week where prices recovered back to the top of their established ranges before trading lower again on a surprise U.S. stock build and continued concerns about the pandemics impact on fuel demand at a time of rising production from Libya, now forecast to reach 1 million barrels/day within weeks," Hansen added.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More