Hedge funds bet on growth of oil contrary to its overabundance


In the U.S., hedge funds and other large speculators made the maximum number of bets on rising oil prices since June last year. This is evidenced by the U.S. Commission on commodity futures trading, reports Bloomberg.

Thus, the number of long positions on the increase in the cost of WTI increased by up to 1152 of the contract 302 384 futures. In turn, the number of shorts decreased by 2.1%. The number of net long positions (the difference between the number of long and short open positions) increased by 5% to a three-month maximum.

As noted by Bloomberg, the amount of bets on growth of oil rose despite the negative data, indicating the continued oversupply in the market. At the beginning of last week, the International energy Agency (IEA) has published its monthly report which indicated that the excess of supply over demand in the first half of 2016 will be more than predicted before. In the IEA believe that the daily oversupply of oil will reach 1.75 million barrels is 250 thousand barrels exceeds the previous assessment.

In the report the IEA noted that “the market is already swamped with oil, and it is very difficult to prevent a significant rise in oil prices in the short term”. The increase in oil prices in the end of January, the Agency called a “false dawn”.

“The number of people who believe that the market has bottomed out, to grow,” said Phil Flynn, a senior analyst at Chicago’s Price Futures Group. According to experts, after reports of oil companies about reducing costs, investors are waiting for the fall production.

Last week the price of WTI fell to 12-year lows. On 11 February, the price of oil dropped to $26,05 per barrel, the lowest level since 2003. When Friday, February 12, WTI jumped by 12%. However, as Bloomberg notes, despite the growth, the results of the week the price of oil fell 4.7% to $29,44 per barrel.