Global tensions to fuel oil rally, say hedge funds

Bloomberg

Hedge funds are betting rising tensions around the globe will keep fueling oil’s rebound this year.
Money managers boosted optimistic wagers on West Texas Intermediate crude to the highest since October in the week ended April 16, according to government data released. Total long and short positions swelled to the most in six months, a sign the rally is luring back investors after 2018’s late-year crash. The US benchmark has jumped about 40 percent this year.
Oil has wavered since nearing $65 a barrel in New York for the first time in five months on April 9. Opec output cuts have pushed prices higher. The Trump administration, meanwhile, faces a pivotal decision on Iranian sanctions, and conflicts in Libya, Algeria and Venezuela remain wildcards.
“You could see the balance swing a few million barrels in either direction in the next few weeks,” said Leo Mariani, an analyst at KeyBanc Capital Markets. “The potential for more supply outages is incredibly high, but the market is also increasingly uncertain.”
The net-long WTI position — the difference between bets on higher prices and wagers on a decline — rose 10 percent to 303,366 futures and options contracts, the US Commodity Futures Trading Commission said. Long positions climbed 8.4 percent, while shorts declined 6.5 percent.
Net-length in WTI remains “relatively low” by historical standards, said Daniel Ghali, a TD Securities commodities strategist, signaling more volatility could be ahead.