Hedge funds turned net bearish on Brent crude for the first time on record as concerns about an oversupply of oil hammer futures prices.
> Money managers’ short positions outnumbered long bets by 12,680 lots in the week ended Sept. 10, the first time that’s happened in ICE Futures Europe data going back to January 2011.
> Hedge funds remained net bullish on WTI, though that position was the smallest since February. Money managers shrank their net bullish Nymex WTI position to 105,024 lots, weekly CFTC data on futures and options show.
Investors are increasingly concerned about an oversupply of
crude next year as non-OPEC countries boost output and demand
from China and the US — the world’s top oil consumers — appears
to be faltering.
The gloomy sentiment rippled across refined-products
markets as well. Money managers also turned the most bearish on
diesel in almost nine years, deepening their net-short position
to 38,609 lots. Similarly, gasoline’s net-long position was the
least bullish in more than seven years, dwindling to just 5,193
lots. Money managers also boosted their bearish gasoil bets to a
record net-short position of 64,461 lots.
Trading in oil options and heavy selling from algorithm-
driven traders helped drive prices to the lowest in more than
two years earlier this week. As bearish bets have surged and the
trade got crowded, some of those positions were unwound later
this week, leading to a tepid price recovery.
Trading Economics:
"WTI crude oil futures dipped slightly to $68.65 per barrel on Friday, breaking a two-day winning streak, as production and refining activities in the U.S. Gulf Coast resumed. As of Thursday, official data showed that nearly 42% of oil production, amounting to over 730,000 barrels per day, remained shut in due to the storm. Despite these supply disruptions, oil prices faced downward pressure amid ongoing concerns about sluggish demand in key markets. The IEA warned of slowing global oil demand growth, particularly driven by China's weakening economy, and projected a potential supply surplus in 2024, even with continued OPEC+ production cuts. Earlier data this week revealed a 3.1% decline in China's crude oil imports from January to August 2024 compared to the same period last year. In the U.S., demand concerns grew as oil and fuel stockpiles increased last week. Despite these headwinds, oil recorded its first weekly gain in five weeks, rising about 1.5%."