In the week ended July 14, Hedge funds and other money managers bought oil futures and options worth an equivalent of 24 million barrels in the six major futures and contracts.
The purchases were most significantly noted in Brent (+11 million barrels) and European gasoil (+7 million) while the NYMEX and ICE WTI (+1 million), US gasoline (+5 million) and U.S. diesel (+1 million) posted smaller buyings.
The focus on Europe indicated the concern over the resurgence of coronavirus in the US, which could harm oil demand.
In general, the hedge fund community is apparently standing in a neutral state in petroleum but tend to favor crude oil more than fuels.
The current net long position across all six contracts, at 642 million barrels, lies in the 61st percentile for all weeks since 2013. The figure was also in line with the mean over the last seven years of 641 million barrels.
Long and short positions among the six contracts are also split in a ratio (4.2:1) close to the mean (4.4:1) for the last seven years. However, the net position for the three crude contracts at 580 million barrels is still above the average of 535 million, and in the 68th percentile.
Analyst John Kemp opined that the markets are torn between the optimism on OPEC+ oil output cut and the prospect of resurrecting new cases of coronavirus along with the continuous fall in oil consumption. This explains the tendency towards crude oil rather than oil products.
Kemp predicted that at the moment, most fund managers will stay on the sidelines for now. The decision would also be affected by the lack of significant new information about either production or consumption in the past four weeks, stagnant spot prices and calendar spreads, and the onset of the summer holiday period in major trading centers.
