قالب وردپرس درنا توس
Home / Business / Hedgefunds Set unexpectedly the scene for an oil rally

Hedgefunds Set unexpectedly the scene for an oil rally



As market participants continue to weigh two crucial bearish factors for oil prices – curb oil demand growth and sky-high oil supply without OPEC – two potentially competent drivers have recovered money managers to buy oil in recent weeks. of a Fed interest rate cut as soon as next week and the exhilaration of the Iran-West tensions in the Middle East and the world's main oil transport path, the Hormuz Strait, resulted in hedge funds buying petroleum futures at the fastest pace of nearly a year in the latest reporting week, according to exchange data collected by Reuters market analyst John Kemp.

Despite the jump in betting on rising oil prices, the current overall positioning of hedge funds and other fund managers points to a further upside for oil prices, as the relationship between longing and shorts is still far from the highlights of April 201

9 and September 2018 followed by fierce sales. Shorts are still relatively high and can provide a further short coverage, while the lengths are not as high as earlier this year, suggesting that there is room for further purchases, Kemp claims.

During the week of July 16, portfolio managers increased their long net position – the difference between bullish and bearish investment – in the six most important oil contracts with an equivalent of 84 million barrels, to a total of 647 million barrels. Betting on rising prices, long positions, jumped by 76 million barrels, while shorts reduced by 8 million barrels in the last reporting week, according to exchange data analyzed by Kemp.

The addition of 84 million barrels to the long net position in the six petroleum contracts was the largest weekly increase in the price of rising prices since August 2018.

The relationship between longings and shorts in WTI Crude and Brent Crude increased to 4.33 a week to July 16, up from 3.82 last week and a recent low level of 3.64 on June 18.

In WTI Crude, fund managers increased their efforts at rising prices most in four months to their highest level since late May, according to exchange data collected by Bloomberg. Related: Oil Gluten Can Worsen When Libya's Civil War Closes

The increased purchase in recent weeks comes after nearly two months of liquidation of longings and opening of short stays as money managers – spooked by grim prospects for it global economy and growth in oil demand – continued to collect shorts and cut oil for a long time.

At the end of May and early June, the oil market was decisively bearish as fears of slowing down the global economy and growth in oil demand intensified. Analysts began to warn that growth in this year's oil demand could be the lowest in several years, and speculators began to intensify sales in the petroleum complex.

This sale was stopped in mid-June, when the tensions in the Middle East began to rattle again.

At the end of June and in the first half of July, market participants and money managers continued to weigh the bearish factors – slowing demand growth and surging US oil production – against the bullish factors such as increasing geopolitical risks and a skilled Fed that could cut interest rates, leading to to weaker US dollars against other currencies that would make the oil cheaper for the major crude oil-producing nations in Asia and stimulate the purchase of commodities traded in dollars.

No one dares to brush the bearish factors aside, especially with recent downgrades of growth forecasts for oil demand growth, but monetary policy in the US and other major economies and the geopolitical risk premium have boosted hedge funds and other money managers in recent weeks. especially compared to the crucial bait insight that had caught the market in late May and the first half of June. Related: Why Goldman Sachs Believe Oil Should Act Higher

The location of the hedge funds, still longing far below the last highlights, suggests that there is much room for the prices to run, that is, if The worst of the demand fears is not materialized.

Concerns about slowing down economies and oil demand growth, combined with a stubborn oil glide despite OPEC's cuts (and due to US slate), even limit the price gains when Iran seized a British oil tanker in the Hormuz Strait, where the daily oil flow in an average of 21 million bpd in 2018, or equivalent to about 21 percent of global consumption of petroleum liquids.

If the Fed and other central banks cut interest rates to stimulate economic growth, this could boost the growth of oil demand and encourage the ability of a heavily weighted market for fear of declining demand. Current hedge fund positions in oil futures also point to risk being tilted upwards.

By Tsvetana Paraskova for Oilprice.com

More top reads from Oilprice.com: Chapter19659020 ??! Function (f, b, e, v, n, t, r) {if (f.fbq) return; n = f.fbq = function () {n.callMethod n.callMethod.apply (n, arguments): n.queue.push (? arguments)}; if (f._fbq) f._fbq = n; n.push = n; n.loaded = 0; n.version = & # 39; 2.0 & # 39 ;; n.queue = []; t = b. createElement (e); t.async = 0; t.src = v; s = b.getElementsByTagName (e) [0]; s.parentNode.insertBefore (t, s)} (window, document, & # 39; script & # 39 ;, & # 39; https: //connect.facebook.net/en_US/fbevents.js'); fbq (& # 39; init & # 39;, & # 39; 247445556002302 & # 39;); FBQ (& # 39; track & # 39;, & # 39; Page View & # 39;); [19659019]
Source link