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Hedge funds slash bullish oil bets to November lows on supply worries
[NEW YORK] Hedge funds and other big speculators cut their bullish wagers on US crude for a second straight week, to the lowest since November, as worries about oil oversupplies grew, data showed on Friday.
Global crude prices, including that of the US West Texas Intermediate (WTI), have struggled to find a bottom over the past six weeks as initial fears that a 60 per cent price drop since June was excessive were later offset by burgeoning oil production.
Prices of WTI, and Brent, the London-traded global benchmark for crude, fell 9 per cent this week as a rallying dollar brought further pressure on dollar-denominated commodities, making them more expensive to holders of the euro and other currencies.
Separately, data from the Commodity Futures Trading Commission showed the net long position in WTI held by money managers, including hedge funds and speculators, dropping by 5,613 contracts to 181,474 in the week ended March 10, the lowest level since November.
The 3 per cent drop followed a 19 per cent drop in net longs last week, the biggest weekly decline since December 2012, Reuters charts showed.
"Interestingly enough, there was more fresh selling than long liquidation" in the current week, said Tim Evans, an energy futures specialist at Citi Futures in New York, who examined the data.
The drop in net longs signals more pain for oil prices despite their rebound last month from near six-year lows hit in January.
"We aim to break the year's low in crude next week," Tariq Zahir, an oil bear at Tyche Capital Advisors in Laurel Hollow, New York, said on Friday.
Before Friday's close at US$44.84 a barrel, WTI had fallen to US$43.48 in January.
Brent had slumped to US$45.19 earlier this year, before settling this week at US$54.67.
The International Energy Agency, which advises industrialized countries on energy, warned on Friday the global oil glut was building and the United States may soon run out of tanks to store crude.
US crude stockpiles stand at nearly 500,000 million barrels after record builds for nine straight weeks.
"We have to go back to the 1930s to find this much oil in the United States," James L Williams, energy economist at WTRG Economics in London, Arkansas, said earlier this week.