London — Hedge funds sold more Brent futures and options last week as concerns about the global economy trumped the decision by the Organization of the Petroleum Exporting Countries (OPEC) and its allies to extend output cuts.
Hedge funds and other money managers sold another 7 million barrels of Brent derivatives in the week to July 2, according to position data published by ICE Futures Europe.
Portfolio managers have now sold a total of 158 million barrels over the last eight weeks, after previously buying 270 million barrels since Dec. 4.
Funds hold a net long or bullish position of just 248 million barrels, which is relatively low compared with the average of 359 million over the last four years.
For the moment, the slowdown in global manufacturing and trade, and the associated hit to oil consumption, is upstaging OPEC’s decision to extend production limits for an extra 9 months until March 2020.
In contrast, fund managers are becoming slightly less bearish towards middle distillates such as European gasoil, which had previously been hardest hit by slowdown fears.
Funds were net buyers of 5 million barrels of gasoil futures and options contracts last week, after buying 3 million the week before, signalling the recent distillate liquidation cycle may be over.
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