Column: Hedge fund oil trades are becoming crowded | Reuters
Climbing oil prices continue to attract fresh buying interest from hedge funds while piling pressure on bearish portfolio managers, but the trade is becoming crowded and at risk of a sudden reversal.
Hedge funds and other money managers purchased the equivalent of 24 million barrels in the six most important petroleum-related futures and options contracts in the week to Oct. 5, regulatory records show.
Purchases over the past six weeks have totalled 194 million barrels, reversing more than two thirds of the 268 million barrels sold over the previous 10 weeks when the market was gripped by fear about rising coronavirus cases.
In the most recent week there was broad-based buying of NYMEX and ICE WTI (+9 million barrels), U.S. gasoline (+9 million), Brent (+4 million) and U.S. diesel (+3 million), with minor sales in European gas oil (-1 million).
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