Oil short-selling hits 8-month high as US-China talks darken outlook

Bloomberg

Pessimism is back in vogue in the oil markets, as investors bet sputtering trade talks and swelling US output can kill crude’s rally.
Hedge funds lifted bearish bets on West Texas Intermediate crude by 39%, the biggest short-selling surge in more than eight months. Meanwhile, bets on a rally retreated for the second straight week.
Crude futures slipped to their third weekly loss in a row after high-level talks between the US and China broke up, with President Donald Trump’s administration giving China a month to reach an agreement or face expanded tariffs.
“Most of the bullish news on supply is priced in now so people are turning towards the trade wars,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “People who were assuming low exports from Iran are now wondering how much leakage there’ll be; Venezuela’s not at the bottom yet, but you can probably see it from here.”
The net-long WTI position — the difference between bets on a price increase and wagers on a decline — fell as much as 10% to 271,912 futures and options contracts in the week that ended on May 7, the US Commodity Futures Trading Commission said.