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Hedge Funds Stay Bullish on Oil Amid Trade Truce, OPEC+ Cuts

Carlos Caminada and Kriti Gupta
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Hedge Funds Stay Bullish on Oil Amid Trade Truce, OPEC+ Cuts

(Bloomberg) -- Hedge funds are approaching the end of the year more optimistic about global oil prices than they’ve been since May.

Their net-bullish wagers on Brent crude climbed for the ninth week in 10, reaching a seven-month high, data released Friday show. The U.S.-China trade truce and OPEC’s commitment to deeper cuts have pushed futures to their highest since an attack on Saudi oil assets in September. But skepticism is also creeping in, with short-selling increasing the most since October.

“It’s a disaster waiting to happen,” said Bob Yawger at Mizuho Securities USA. “We’re seeing the largest net-long speculative position” in both West Texas Intermediate and Brent in seven months, he said.

Money managers’ Brent net-long position, or the difference between bullish and bearish bets, climbed 1% to 402,455 futures and options, the highest since May, according to ICE Futures Europe data for the week ended Dec. 24. Long-only wagers rose 2.4%, while shorts increased 11%.

Bets on West Texas Intermediate crude prices showed a similar pattern, with the overall positioning signaling optimism, while a surge in short-selling pointed to some underlying skepticism.

WTI net-longs rose 2.8% to 279,840 contracts over the same period, with long-only bets up 5.6% and shorts surging 31%, according to U.S. Commodity Futures Trading Commission data released Monday.

(Adds WTI positioning in final two paragraphs)

To contact the reporters on this story: Carlos Caminada in Calgary at ccaminada1@bloomberg.net;Kriti Gupta in New York at kgupta129@bloomberg.net

To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Joe Carroll

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