Speculators reduce net-long positions in Brent
Money managers and hedge funds have decreased their net-long bets on ICE Brent futures in the week to 29 September.
IMAGE: Oil storage facility. Getty Images
Speculators sold a little short of 14,000 lots as of 29 September, decreasing net-long positions in Brent futures to over 204,000 lots.
The latest positions data marks the second consecutive week of decline in net-long positions. Gross-long positions in Brent futures decreased by more than 7,000 lots during the week.
This is “the smallest position held since early August,” two analysts from ING Bank noted.
The slump in net-long positions was driven largely by fresh shorts entering the market, according to futures and options data from ICE Futures Europe.
Market participants slashed net-long bets as some oil flows from Persian Gulf producers were restored last week, according to market analysts.
Commenting on the latest positions data, ING Bank’s analysts said, “signs of increased oil flows from the Persian Gulf would likely leave speculators reluctant to carry too much risk at the moment.”
Meanwhile, Brent crude’s price remains elevated amid incessant attacks on critical energy infrastructure, while commercial navigation through the Strait of Hormuz remains choked.
When speculators reduce net-long positions, oil prices tend to decline. Conversely, when they boost these positions, prices typically rise, leading to a cycle where their actions can influence oil prices and the market.
By Aparupa Mazumder
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