Speculators cut net-long positions in Brent
Money managers and hedge funds have slightly reduced their net-long bets on ICE Brent futures in the week to 7 July.
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Speculators sold 547 lots as of 7 July, marginally decreasing net-long positions in Brent futures to a little over 55,000 lots.
The drop in net-long positions marks the eight consecutive week of reductions. The move comes despite renewed hostilities between the US and Iran, disrupting some vessel traffic through the Strait of Hormuz.
The move can be attributed to fresh shorts entering the market. Gross-long positions in Brent futures decreased by 367 lots during the week.
“The latest positioning data shows that speculators are still reluctant to jump into the oil market,” two analysts from ING Bank remarked.
Brent futures are currently caught in a tug-of-war between hopes of diplomatic a breakthrough between the US and Iran, and the actual reality of attacks targeting vital energy infrastructures and commercial vessels in the region.
“The uncertainty over the recent flare-up in tensions -- whether it will be short-lived or more sustained -- seems to be keeping a large share of market participants on the sidelines,” ING Bank’s analysts said.
When speculators reduce net-long positions, prices tend to decline. Conversely, when they boost these positions, oil prices typically rise, leading to a cycle where their actions can influence oil prices and the market.
By Aparupa Mazumder
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