Hedge Fund Positions in Crude, Gasoline Start to Look Stretched

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LONDON, Jan 18 Reuters Hedge funds boosted their bullish petroleum positions last week, focusing on crude and gasoline, betting on continued output restraint by OPEC and an early resumption in domestic business activity.

But they sold middle distillates, likely reflecting concerns about a slower reopening of international borders and return to aviation, even as coronavirus vaccines are rolled out.

In total, hedge funds and other money managers purchased the equivalent of 51 million barrels in the six major petroleum futures and options contracts in the week to Jan. 12.

It was the largest wave of buying for seven weeks and takes the total since the middle of November to 450 million barrels, records published by ICE Futures Europe and the U.S. Commodity Futures Trading Commision show.

Most of last weeks purchases established new bullish long positions 41 million. There were also some repuchases of previous lossmaking short positions 10 million.

Buying was concentrated in Brent 25 million barrels and NYMEX and ICE WTI 22 million with smaller purchases in U.S. gasoline 7 million, and sales of both U.S diesel 1 million and European gasoil 2 million.

Funds hold a combined position in the six contracts equivalent to 805 million barrels, up from 356 million at the start of November, before successful vaccine trials were announced, though still down from 970 million this time last year.

Bullish long positions outnumber bearish short ones by a ratio of more than 51, up…

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