image

Column-Funds sell oil as economic weakness trumps sanctions: Kemp

Hedge funds and other money managers sold the equivalent of 11 million barrels in the six most important petroleum-related futures and options contracts in the week to April 5.

Funds have been sellers in four of the last five weeks reducing their overall net long position by the equivalent of 188 million barrels since the start of March, according to exchange and regulatory records.

The most recent week saw light sales of Brent (-4 million barrels), NYMEX and ICE WTI (-3 million), U.S. gasoline (-2 million) and European gas oil (-4 million) with small buying in U.S. diesel (+1 million).

Bullish long positions were reduced by 8 million barrels while the number of bearish short positions was increased by 4 million barrels (https://tmsnrt.rs/3xjwVae).

Fund managers have maintained an overall bullish bias, with long positions outnumbering shorts by a ratio of 4.64:1, in the 59th percentile for all weeks since the start of 2013.

But positioning overall has become more cautious with a combined net long position of 542 million barrels (36th percentile) down from 761 million (80th percentile) in mid-January.

The total number of option futures positions held by hedge funds and other traders has fallen for seven consecutive weeks by a total of 1,142 million barrels (18%).

Increased uncertainty, heightened volatility and sharply raised margin requirements have made it much more expensive and risky to hold existing positions or initiate new ones.

On the supply side, the risk of a disruption to Russian crude and products exports has been offset for now by the promise of a massive release of 240 million barrels from strategic stocks held by the United States and its allies.

On the demand side, there are increasing downside risks from the worsening coronavirus outbreak in Shanghai and other parts of China and evidence of a business cycle slowdown in North America and Europe.

As a result, the hedge fund community has become mildly bearish about the outlook for crude while there is still slightly more bullishness about middle distillates such as diesel, jet fuel and European gas oil.

Even in middle distillates, funds have been sellers in eight of the last nine weeks, reducing their net position by a total of 72 million barrels (50%).

For most money managers, the projected petroleum production-consumption balance has become less tight as the economy struggles, while shortages of diesel and jet fuel are expected to hold crack spreads a little firmer.

Related columns:

– Hedge funds struggle with triple uncertainties on oil (Reuters, April 4)

– White House uses oil reserve to place a giant spread trade (Reuters, April 1)

– China’s cooling economy takes some heat out of commodity prices (Reuters, March 31)

– Hedge fund oil positions caught between risks from sanctions and recession (Reuters, March 29)

John Kemp is a Reuters market analyst. The views expressed are his own

(Editing by David Evans)


Source link

0 0 votes
Article Rating

 
S’abonner
Notifier de
0 Commentaires
Commentaires en ligne
Afficher tous les commentaires
Reset Password

Avertissement sur les risques :

Le trading peut vous exposer à des risques de pertes supérieures aux dépôts et ne convient qu’à une clientèle avisée ayant les moyens financiers de supporter un tel risque. Les CFD sont des instruments complexes et présentent un risque élevé de perte rapide en capital en raison de l’effet de levier. Entre 74 et 89% des comptes de clients de détail perdent de l’argent lors de la négociation de CFD. Vous devez vous assurer que vous comprenez comment les CFD fonctionnent et que vous pouvez vous permettre de prendre le risque élevé de perdre votre argent. Ce site n’est en aucun cas une offre de conseil en investissement ni une incitation quelconque à acheter ou vendre des instruments financiers. Trader le Forex et/ou les CFD’s implique un niveau de risque élevé, et peut ne pas être approprié car vous pouvez subir des pertes supérieures à votre dépôt. L’effet de levier peut être en votre défaveur.

Vous devez être conscient et avoir une compréhension complète de tous les risques associés au marché et au trading. Le site Union-trader.com peut être amené à produire des commentaires d’ordre général, ce qui ne constitue pas des conseils en investissement et ne doit pas être interprété comme tel.

Veuillez recourir aux conseils d’un conseiller financier extérieur. Le site Union-trader.com décline toute responsabilité pour les erreurs, inexactitudes ou omissions et ne garantit pas l’exactitude ou le caractère complet des informations, textes, graphiques, liens ou autres éléments contenus dans cette documentation. Toute information et toute mise à disposition sur le site ont un caractère privé.