Crude oil market rallies on fading fears of a glut

New York

THE oil market has all but forgotten last year's price crash.

Money managers haven't been this optimistic about US oil prices since early October, just before the crude market began a steep decline on fears of a global oversupply.

Crude made a steady comeback this year and sentiment has climbed alongside it, with the net-long position rising for the sixth straight week in data posted on Friday.

West Texas Intermediate crude prices rallied almost 5 per cent last week as Opec stuck to output cuts and blackouts continued to sap Venezuelan production.

While the economic outlook remains uncertain, there have been enough positive signs - including encouraging US jobs data - to allay the worst fears about demand, said Nick Holmes, an analyst at Leawood, Kansas-based Tortoise.

"China has put on stimulus, the Fed is pretty much all-in dovish on interest rates and it seems like we could be near an end to the trade war," said Mr Holmes, whose firm manages US$16 billion in energy investments. "A lot of the risks that people saw have abated here in 2019 and that's driving the market higher."

The net-long WTI position - the difference between bets on higher prices and wagers on a decline - climbed 2.8 per cent to 244,807 futures and options contracts for the week ended April 2, according to the US Commodity Futures Trading Commission. Long positions edged up by almost one per cent, while shorts plunged by 10 per cent.

"There's room for sentiment to expand without being completely stretched out - but you're at the higher end of the range," said Rob Haworth, senior investment strate-gist at US Bank Wealth Management in Seattle, which oversees US$164 billion.

"I think there's a question about how far this sentiment can go," he added. BLOOMBERG