Speculators increase net-long positions in Brent

Money managers and hedge funds have hiked their net-long bets on ICE Brent futures in the week to 10 June.

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Speculators bought a little over 29,000 lots as of last Tuesday, increasing net-long positions in Brent futures to almost 197,000 lots, according to futures and options data from ICE Futures Europe.

The increase in net-long positions was driven by some fresh longs entering the global oil market and the “liquidation of short positions”, according to two analysts from ING Bank. The gross-long positions in Brent gained by more than 16,000 lots higher during the week.

The growth in buying interest marks the “highest bullish bets since the week ending on 1 April,” ING Bank analysts noted.

Brent’s price has gained some upward momentum in recent days on the back of mounting tensions between Israel and Iran, and weak prospects of a US-Iran nuclear agreement.

Safety concerns around the use of critical oil transit chokepoints in the region, including the Strait of Hormuz, Suez Canal, Gulf of Aden and the Bab al-Mandab Strait, have resurfaced amid the brewing conflict.

Over the weekend, Israel struck two key energy facilities near Tehran – Shahran fuel depot and the Shahr Rey oil refinery. The strikes may lead to a broader regional conflict, adding risk premiums to Brent crude’s price, according to market analysts.

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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