Hedge funds increased bets on rising oil prices just before crude futures tumbled to a 17-month low on signs that global supply is outstripping demand.
Prices capped the biggest weekly decline in two months after money managers boosted net-long positions in West Texas Intermediate by 4.1 percent in the seven days ended Sept. 30. Long positions climbed 2.7 percent, U.S. Commodity Futures Trading Commission data show.
WTI sank below $90 on Oct. 2 after Saudi Arabia, the world’s largest oil exporter, cut its prices to Asia. U.S. production is the highest since 1986, while OPEC output expanded to the most in a year. The International Energy Agency last month reduced its projections for demand growth this year and in 2015, citing a weakening economic outlook.
“Oil isn’t looking like a good bet anymore,” Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by phone Oct. 3. “Production continues to rise, flooding the market, while on a good day the demand picture looks anemic.”
Crude declined 0.4 percent to $91.16 a barrel on the New York Mercantile Exchange in the period covered by the CFTC report. Futures were little changed at $89.73 a barrel at 9:09 a.m. in New York today. They slid $1.27 to close at $89.74 on Oct. 3, the lowest settlement since April 2013.
via Bloomberg 
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