Investor optimism on global oil price wanes

Bloomberg

Over the past four months, investor optimism that global crude prices will rise has slumped by almost half.
Hedge funds’ net-bullish position on Brent crude, a measure of how positive money managers are that prices will gain, has plunged 49 percent since early April as trade wars cloud the picture for oil consumption. Despite a good week for the benchmark amid strikes at North Sea fields and declines in US stockpiles, Brent remains about 6 percent down from this year’s peak in May.
“When you start to look at the different economies across the globe — Europe, Asia, the emerging markets are definitely starting to hit some headwinds,” said Mark Watkins, who helps oversee $151 billion at US Bank Wealth Management. Investors “are potentially getting a little bit more concerned about the rest of 2018, and probably going into 2019, that demand
might be a little bit softer than previously had been.”
The exchange of tariffs between the US and China is one factor that threatens to weaken global economic growth and hurt energy demand. Technical indicators also pointed to a potential decline in prices: During the period covered by the report, Brent’s 50-day moving average dropped below its 100-day one, an invitation to sell.
Hedge funds’ net-long position — the difference between bets on higher prices and wagers on a drop — in Brent was reduced to 324,431 contracts, ICE Futures Europe data show for the week ended August 21.
The net-long position in West Texas Intermediate crude, the American benchmark, slid 4 percent to 327,742 futures and options, the lowest level in two months, according to the US Commodity Futures Trading Commission. Longs and shorts both rose. Money managers cut their net-long positions on benchmark US gasoline and diesel both by about 11 percent, according to the CFTC.