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UPDATE 2-Hedge funds' bullish U.S. crude bets soar to 6-week high after OPEC deal
December 9, 2016 / 9:50 PM / 9 months ago

UPDATE 2-Hedge funds' bullish U.S. crude bets soar to 6-week high after OPEC deal

(Adds positioning in refined products, milestone in ULSD net
longs)
    By Devika  Krishna Kumar
    NEW YORK, Dec 9 (Reuters) - Hedge funds rushed to place
bullish wagers on U.S. crude oil, data showed on Friday, after
the world's largest producers agreed to curb output for the
first time since 2008 in an effort to rein in a glut and support
prices.
    The speculator group raised its combined futures and options
position in New York and London by 86,085 contracts to 275,763
in the week to Dec. 6, data from the U.S. Commodity Futures
Trading Commission (CFTC) showed. That was the biggest weekly
increase since late August, when speculators boosted bullish
bets by a record 88,924 contracts.
    The increase brought total net longs in U.S. crude futures
and options to the highest since Oct. 18. 
    Members of the Organization of the Petroleum Exporting
Countries (OPEC), which accounts for a third of global crude
supply, agreed last week to cut production from January by
around 1.2 million barrels per day (bpd), or over 3 percent, to
32.5 million bpd. 
    Oil prices rallied nearly 13 percent in the week to Dec. 6
after OPEC announced the deal.
    The rally also prompted U.S. shale producers to pounce on
the opportunity to hedge and lock in future output. 
    Gross short positions among producers rose to
the highest since May 2010 at 657,487 lots in New York, CFTC
data showed.
    In the days leading up to the OPEC deal, there was
widespread speculation of a rift among member countries about
the terms of the deal and potential exceptions to the agreement,
leading to some speculators cutting back on bullish bets.
  
    However, OPEC kingpin Saudi Arabia and rival Iran were able
to negotiate a deal successfully.  
    Since the deal was announced, prices have edged slightly
lower to around $50 a barrel as many market participants
questioned the deal's implementation.
    On Friday, crude prices were up about 1 percent on hopes
that non-OPEC producers meeting in Vienna over the weekend would
agree to output restrictions to go along with the OPEC deal. 
OPEC oil ministers will meet with non-OPEC producers on
Saturday. 
    Russia's energy minister said on Friday he expected non-OPEC
producers to fully contribute to output cuts agreed earlier with
OPEC. 
     U.S. crude stockpiles fell last week even as inventories
piled up at the Cushing, Oklahoma hub. Inventories 
fell 2.4 million barrels in the week ended Dec. 2, compared with
analyst expectations for a draw of 1 million barrels. 
    Among refined products, speculators boosted bullish bets in
RBOB gasoline, with a combined futures and options net
long position of 40,473 contracts in the week to Dec. 6, a
one-month high.
    Speculators also piled into bullish bets on heating oil
, pushing the net long position to the highest level since
July 2014 with 24,290 contracts as demand picked up with
forecasts for a colder winter. 

 (Reporting by Devika Krishna Kumar in New York; Editing by
Andrew Hay and Meredith Mazzilli)

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