Speculators increase net-long positions in Brent

Money managers and hedge funds increased their net-long bets on ICE Brent futures in the week to 13 May, driven by fresh long positions entering the global oil market.

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Speculators had bought about 53,000 lots as of last Tuesday, hiking net-long positions in Brent futures to a little over 100,000 lots, according to futures and options data from ICE Futures Europe.

The increase in net-long positions was “predominantly driven by fresh longs entering the market,” according to two analysts from ING Bank. The gross-long positions in Brent moved nearly 44,000 lots higher during the week.

Speculative trading occurs when money managers and hedge funds invest based on expectations of future price movements. The growth in buying interest comes amid easing trade tensions between the US and China – the world's two largest oil consumers.

Last week, the US-China tariff battle de-escalated when Washington decided to reduce levies on most Chinese goods from 145% to 30%, and as Beijing agreed to lower tariffs on US goods from 125% to 10%, for a 90-day initial period.

Commenting on the latest trend, ING Bank analysts said that this increase in long positions come “as sentiment improved with the tariff pause between China and the US.”

When speculators boost their net-long positions, oil prices typically rise. Conversely, when they reduce these positions, prices tend to decline, leading to a cycle where their actions can influence oil prices and the market.

By Aparupa Mazumder

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