En Español

Very usefull links


News links




Dow Jones

Oil price



Views and News





John Kemp: Oil prices stall as hedge funds stop adding to longs


Petroleumworld.com 01 17 2017

Hedge fund bullishness towards the price of crude oil appears to have peaked for the time being, with fund managers booking some profits after the strong rally in the final seven weeks of 2016.

Few managers are willing to bet on a pull back in prices at the moment with the number of short positions still towards the bottom end of the range that has prevailed since 2014.

But the lack of fresh long positions has removed one of the factors which helped push oil prices higher in the closing weeks of 2016 and prices have been trending down since the turn of the year.

Hedge funds and other money managers cut their net long position in Brent and WTI futures and options by the equivalent of 15 million barrels in the week to Jan. 10 ( tmsnrt.rs/2ixZUNl ).

The net position declined for the second week running, after rising in five of the previous six weeks, according to an analysis of data published by regulators and exchanges ( tmsnrt.rs/2iy61kD ).

Hedge funds had amassed a record net long position of 796 million barrels by the middle of December, up from a recent low of just 422 million barrels in the middle of November.

Since then, however, the net long position has been flat or falling, and had been cut to 776 million barrels by Jan. 10.

Hedge funds long positions still outnumber short positions by a ratio of 7:1, but the ratio is down from almost 8:1 in mid-December ( tmsnrt.rs/2ixWV7A ).

Fund managers are becoming more cautious about the outlook after oil prices rose by almost $15 per barrel or more than a third in the final seven weeks of 2016.

Brent is now trading very close to the average level most traders are forecasting for 2017, according to a Reuters survey ( tmsnrt.rs/2ijPcd9 ).

Nearly two-thirds of all respondents thought Brent prices would average $55 or $60 in 2017, which is not much different from the closing price of $54 on Jan. 10.

There is more bullishness among hedge fund managers about the outlook for U.S. gasoline prices, however.

Money managers have continued to accumulate long positions even as bullishness on crude has stalled.

Hedge funds have established a net long position of more than 63 million barrels in gasoline blendstock futures and options, up from 37 million in mid-December and just 28 million in mid-November.

The net long position in NYMEX gasoline blendstock is the largest since July 2014, when the price of oil was beginning its long slide ( tmsnrt.rs/2iy3x5T ).

* Chart 1: tmsnrt.rs/2ixZUNl

* Chart 2: tmsnrt.rs/2iy61kD

* Chart 3: tmsnrt.rs/2ixWV7A

* Chart 4: tmsnrt.rs/2ijPcd9

* Chart 5: tmsnrt.rs/2iy3x5T


Story by John Kemp a Reuters market analyst. The views expressed are his own; Editing by David Evans from Reuters.

We invite all our readers to share with us
their views and comments about this article

Write to editor@petroleumworld.com

By using this link, you agree to allow PW
to publish your comments on our letters page.

Any question or suggestions,
please write to: editor@petroleumworld.com

Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels









Contact: editor@petroleumworld.com,

Editor & Publisher:P.Ohep F. /Producer - Publisher:P.Ohep F./
Contact Email: editor@petroleumworld.com

CopyRight © 1999-2016, Paul Ohep F. - All Rights Reserved. Legal Information

PW in Top 100 Energy Sites

CopyRight©1999-2016, Petroleumworld   / Elio Ohep Fitzgerald- All rights reservedThis site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission fromPetroleumworld or the copyright owner of the material.