Speculators continue to reduce net-long positions in Brent

Money managers and hedge funds have continued to reduce net-long bets on ICE Brent futures in the week ending 26 November, as trading remains rangebound amid ongoing geopolitical tensions and a bearish demand outlook

PHOTO: Oil barrels kept next to an oil well. Getty Images

Speculators sold 4,081 lots over the week ending 26 November to leave them with net-long positions in Brent futures of 130,848 lots, according to futures and options data from ICE Futures Europe.

“Over the last week [ending 26 November] there was little change in speculative positioning in ICE Brent,” two analysts from ING Bank said.

Oil market analysts have highlighted that oil prices remain under pressure due to tepid demand growth forecasts and ample inventory levels. Weaker Chinese demand fundamentals projected for the coming year provide a limited incentive for speculative trading. These factors have led to the decline in net-long positions in Brent.

Speculative trading occurs when money managers and hedge funds invest based on expectations of future price movements. These positions can push Brent’s price higher or lower, creating a cycle where their actions directly influence both the market and oil prices.

When speculators boost their net-long positions, oil prices typically rise; conversely, when they reduce these positions, prices tend to decline, leading to a cycle where their actions can influence the market and oil prices.

Meanwhile, potential risks remain, such as OPEC+ extending supply cuts beyond January 2025, supporting oil prices. In such a case, the market could see net-long bets in Brent rise.

By Aparupa Mazumder

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