Oil buying accelerates amid growing confidence in economic recovery

Oil buying accelerates amid growing confidence in economic recovery

LONDON: Hedge funds boosted their position in petroleum for the fourth week running, as bullishness about oil consumption and prices rebounded after the setback in March.

Hedge funds and other money managers purchased the equivalent of 40 million barrels in the six most important petroleum futures and options contracts in the week to May 4.

Portfolio managers have bought 102 million barrels over the last four weeks, reversing sales of 113 million barrels between the middle of March and early April.

In the latest week, there were purchases across the complex, led by NYMEX and ICE WTI (+14 million barrels) and Brent (+11 million) but also European gasoil (+7 million), U.S. gasoline (+6 million) and U.S. diesel (+1 million).

Long positions outnumber shorts by a ratio of nearly 6:1, almost back to the previous peak in mid-February, and in the 80th percentile for all weeks since the start of 2013, implying a broad consensus that prices are headed even higher.

The rate of hedge fund buying is accelerating and widening to include both crude and refined fuels, consistent with growing confidence about an economic recovery and cyclical upturn in petroleum consumption.

Rising coronavirus infections in India and a delayed resumption in passenger aviation are no longer deterring oil bulls, with buyers anticipating consumption will nonetheless increase later in the year.

In recent weeks, the number of rigs drilling for oil in the United States has also flattened out, implying a slower increase in shale production over the second half of the year, helping support prices at a higher level.

About Author

Related posts

Amazon Trade Ideas

German union calls for Amazon workers to strike on ‘Prime Day’

Amazon (NASDAQ:AMZN) is trading down 0.07% at 3486.90 A German trade union called on workers at seven Amazon (NASDAQ:AMZN)warehouses to go on strike on Monday for several days to coincide with the global Prime Day promotion. Verdi said it was organising the three-day strike as part of a long-running...

Read More
Top 5 Stock To trade Today

Top 5 Stock To Watchout Today 21 -June-2021

TOP 5 STOCKS TO WATCHOUT:- 1.GOLDMAN SACHS:-Goldman Sachs has launched its transaction bank in Britain, the firm said Monday, expanding the business after launching in the United States last year as it looks for steadier sources of revenue beyond its investment bank. The bank is to offer companies in...

Read More

Leave a Reply