Liquidation of short positions, not bulls, behind recent oil rally: data

New York

OIL enthusiasts haven't been jumping on board the latest rally.

As crude has soared 50 per cent since Feb 11, the number of bets on increased prices has barely budged. Instead, the upward pressure on prices appears to have come from traders cashing out of bearish wagers at an unprecedented pace. The liquidation of short positions during the last seven weeks covered by data from the US Commodity Futures Trading Commission (CFTC) was the largest on record.

"The rally has come from shorts getting scared out of their positions, and you're not seeing a lot of money coming in on the long side," said John Kilduff, partner at Again Capital LLC, a New York hedge fund focused on energy. "It really calls into question the fortitu…