Speculators cut net-long positions in Brent

Money managers and hedge funds cut their net-long bets on ICE Brent futures in the week to 18 February, driven by fresh shorts entering in the global oil market.

IMAGE: Oil barrels. Getty Images

Speculators sold about 24,000 lots as of last Tuesday to leave them with net-long positions in Brent futures of about 265,000 lots, according to futures and options data from ICE Futures Europe.

The slump in net-long positions was predominantly driven by “a combination of longs being liquidating and fresh shorts entering the market,” according to two analysts from ING Bank.

Speculative trading occurs when money managers and hedge funds invest based on expectations of future price movements.

The gross-long positions in Brent declined by about 15,000 lots during the week. The decrease in buying came amid trade and tariff concerns, along with speculations of an over-supplied global market.

The ongoing negotiations between Washington and Moscow to end the war in Ukraine could see the US lifting its sanctions on Russian oil exports and increase global oil supply.

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.

By Aparupa Mazumder

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