Hedge Funds Reduce Large Oil Positions Uncertain About Supply

Hedge funds have continued liquidating their large bullish position in crude amid doubts about the pace and timing of any rebalancing in the oil market.

Hedge funds’ net position in Brent and WTI has been cut to 642 million barrels, down from a record 951 million barrels on Feb. 21 (tmsnrt.rs/2nvXl0M).

The spread of risks between further long liquidation and new short covering now looks more balanced than at any point since OPEC’s production deal was announced at the end of November.

Hedge funds and other money managers cut their net long position in the three major futures and options contracts linked to Brent and WTI by a further 41 million barrels in the week to March 28.

Fund managers have cut their net long position for five consecutive weeks by the equivalent of 309 million barrels, according to an analysis of records published by exchanges and regulators (tmsnrt.rs/2nvXjWI).

Managers have reversed more than half of the extra 529 million barrels of net long positions accumulated between the middle of November and the middle of February.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza