(John Kemp is a Reuters market analyst. The views expressed are
his own)
* Chartbook: https://tmsnrt.rs/3dXdj1K
By John Kemp
LONDON, March 1 (Reuters) - Hedge funds have reduced their
position in petroleum futures and options for the first time in
16 weeks, the first weekly net sales since the first successful
coronavirus vaccine trials were announced in early November.
Hedge funds and other money managers sold the equivalent of
9 million barrels in the six most important petroleum futures
and options contracts in the week to Feb. 23 (https://tmsnrt.rs/3dXdj1K).
The sale comes after portfolio managers purchased a total of
548 million barrels over the previous 15 weeks, according to
records published by ICE Futures Europe and the U.S. Commodity
Futures Trading Commission.
After three months in which benchmark crude prices had risen
by more than $26 per barrel or 68%, bullish positions had become
stretched, increasing the probability of a reversal, at least in
the short term.
Prior to the recent sales, the combined position across all
six contracts had reached the 82nd percentile for all weeks
since the start of 2013 – a lopsided position that is little
changed even after the sales.
The most recent week saw small buying in NYMEX and ICE WTI
(+3 million barrels) and Brent (+1 million) but selling in U.S.
diesel (-6 million), U.S. gasoline (-4 million) and European
gasoil (-2 million).
Even after the sales, combined crude positions are in the
83rd percentile for all weeks since the start of 2013, while
fuel positions are in 70th percentile.
The pattern is consistent with an expectation of continued
crude output restraint by OPEC+ but slightly more softness in
the consumption of refined fuels as a result of the epidemic and
lingering travel restrictions.
Related columns:
- Fund buying in oil stalls after prices top $60 (Reuters,
Feb. 22)
- Oil market rebalancing largely complete, except for jet
fuel (Reuters, Feb. 19)
- Funds bought U.S. crude ahead of big freeze (Reuters, Feb.
15)
- Funds rotate from gasoline to diesel as epidemic lingers
(Reuters, Feb. 8)
(Editing by David Evans)