from oilprice The Bulls Are Back
Between July 3 and 11, money managers bought the equivalent of 115 million barrels in the six most important petroleum contracts. That was the 14th largest jump in petroleum futures buying in all weeks since 2013—one of the biggest in the past decade, per estimates by Reuters market analyst John Kemp based on the reports of fund positions in commodities.
Brent and WTI led the buying, but hedge funds managers also bought U.S. gasoline and diesel, as well as European gasoil. Longs were added, and shorts were cut in all petroleum contacts, suggesting that market participants have started to unwind some of the previously bearish bets on the oil complex after Saudi Arabia signaled it would not give up chasing the “stability of the market,” also known as higher oil prices.
With the Kingdom showing it would do whatever it takes to stop prices from collapsing, traders have become more bullish on oil.
Hedge funds and other speculators increased their crude and fuel exposure by one-third to a three-month high with tightening supply in focus in the first seven trading days in July, Ole Hansen, Head of Commodity Strategy at Saxo Bank, said on Monday in comments on the data about the commitment of traders. Crude and fuel products rose by around 7% between July 3 and 11.
Fund buying of Brent and WTI crude oil accelerated. The combination of short covering, with 34,000 lots, and fresh longs, at 47,000 lots, triggered the biggest jump and net long in crude oil contracts in three months. Fuel products also saw strong demand, Hansen said.
The net long in crude oil jumped to the highest since April.
The money managers’ positioning is not outright bullish because the ratio of bullish to bearish bets was 3:1 as of July 11. But the longs-shorts ratio jumped from 2:1 compared to the end of June, pointing to increased confidence from traders that Saudi Arabia has put a firm floor under oil prices.