LONDON (Reuters) – Hedge fund managers purchased petroleum derivatives for the second week running, though buying was in small volumes in most contracts, with trading quiet around the end-of-summer holiday period.
Money managers bought the equivalent of another 16 million barrels in the six most important petroleum futures and options contracts in the week to Sept. 7 (tmsnrt.rs/2YT7oFC).
The purchases built on 60 million barrels of buying the previous week, which was the second-largest volume this year, after Hurricane Ida disrupted oil production in the Gulf of Mexico.
The only significant change last week was substantial buying of European gas oil (+12 million barrels), building on large-scale buying the previous week (+21 million barrels).
Elsewhere, there were only small purchases of Brent (+6 million), NYMEX and ICE WTI (+1 million) and U.S. diesel (+1 million), partially offset by small sales of U.S. gasoline (-4 million).
Portfolio managers remain moderately bullish towards oil, with a combined position of 753 million barrels (70th percentile for all weeks since 2013) and long positions outnumbering short ones by a ratio of 5.36:1 (72nd percentile).
But much of the bullishness is concentrated in middle distillates, where long positions outnumber short ones by a ratio of 9.1:1, which is much higher than crude (5.3:1) or gasoline (2.8:1).
Fund managers appear to be betting that manufacturing and freight will remain strong, even as the coronavirus resurgence continues to restrict cross-border aviation.
– Oil attracts heavy fund buying as prices bounce (Reuters, Sept. 6)
– Hedge fund oil selling runs its course (Reuters, Aug. 31)
– Hedge funds’ bullishness on oil ebbs away (Reuters, Aug. 23)
Editing by David Goodman