Hedge funds increase their long oil positions

Oil seems to be on the line, and hedge funds back into commodity trading. Hedge funds have not been more lenient since the beginning of March this year, and all this positivism has grown after the US energy administration cut its production forecasts and increase its consumption forecast in 2017. At the same time, the efforts of OPEC and the other producer countries seem to work, with the balance from the beginning of the year to 28% less than last year.

The rise in the price of black gold is better for the Brent variety, where long-term options continue to enjoy unprecedented interest. This pattern of trading is known as Backwardation, and is available when demand is more than deliveries.

The other factor that influences and will continue to affect the price of oil is the shale industry in the United States. Over the past six weeks, manufacturers have released only 24 shale platforms, which means that the rise of this industry may have peaked or stalled.

Given the above-mentioned news and facts, the hedge funds increased their net position of WTI by 32% to 208,292 futures and options as of September 19, according to CFTC. Similarly, short positions on oil have fallen by 15%.

Meanwhile, the Texas refinery refineries that were hit by Hurricane Harvey are recovering and are expected to spend a lot of US reserves, which will positively affect the price. An increase is also seen in the open positions of gasoline and diesel after Harvey and Irma hit the southern states.

Source: Bloomberg Pro Terminal

Jr Trader Petar Milanov

Read more:

• Oil fundamental and inertia can push prices to new highs
• Goldman Sachs: “Gold is a better hedge than oil in current market conditions”
• Golden years for Gold
• The end-of-year gold rally continues at full speed
• Gold goes over $ 1,500, big players with estimates for the next year