(John Kemp is a Reuters market analyst. The views expressed are
* Chart 1: tmsnrt.rs/2oi5fi3
* Chart 2: tmsnrt.rs/2oi1YPy
* Chart 3: tmsnrt.rs/2nZYkHq
* Chart 4: tmsnrt.rs/2nxixIt
* Chart 5: tmsnrt.rs/2nZRlOX
By John Kemp
LONDON, April 10 Hedge funds have turned bullish
towards crude oil again as international marker prices have
steadied above the psychologically important $50 threshold.
Hedge funds and other money managers increased their net
long position in the three main Brent and WTI futures and
options contracts by 54 million barrels in the week to April 4.
The boost in the net long position comes after five
consecutive weeks of drawdowns between Feb. 21 and March 28
totalling 309 million barrels. (tmsnrt.rs/2oi5fi3)
By April 4, fund managers held an overall long position
equivalent to 696 million barrels, according to an analysis of
position data published by regulators and exchanges. (tmsnrt.rs/2oi1YPy)
The position is well below the recent peak of 951 million
barrels reported on Feb. 21 but far above the recent low of 422
million recorded in mid-November before OPEC’s production deal.
Hedge fund managers remain overwhelming bullish about the
outlook for oil prices. Fund managers’ long positions outnumber
shorts by a ratio of more than 4:1. (tmsnrt.rs/2nZYkHq)
Hedge fund managers' faith in the outlook for oil prices was
badly shaken by the sharp sell-off that started on March 8 and
lasted through subsequent sessions.
But managers seem to have recaptured some of that confidence
after front-month Brent prices found a floor just above $50 per
barrel on March 27. (tmsnrt.rs/2nxixIt)
Funds added the equivalent of 30 million barrels of extra
long positions in Brent and WTI between March 28 and April 4.
The stabilisation and subsequent rise in prices also
prompted a wave of short-covering, with funds cutting short
positions by a total of 24 million barrels.
Short positions had previously more than doubled to 241
million barrels on March 28 from 102 million on Feb. 21 in the
sixth cycle of short-selling since the start of 2015.
But with prices no longer falling, and new buyers emerging,
many short position owners decided to take profits, accelerating
the upward move in prices.
If hedge funds have shifted to closing out short positions
after just five weeks, which seems likely, this will be the
briefest and shallowest short-selling cycle since the start of
(Editing by Jason Neely)