Speculators cut net-long positions in Brent
Money managers and hedge funds have reduced their net-long bets on ICE Brent futures in the week to 12 May.
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Speculators sold over 28,000 lots as of last Tuesday, decreasing net-long positions in Brent futures to about 346,000 lots.
Gross-long positions in Brent futures decreased by a little short of 19,000 lots during the week, according to futures and options data from ICE Futures Europe.
The move came amid some hopes of a ceasefire between the US and Iran, ahead of last week’s US-China meeting.
“This move was driven predominantly by longs liquidating,” two analysts from ING Bank said.
US President Donald Trump met with Chinese counterpart Xi Jinping last week. The meeting was supposed to ease some Middle East tensions, as market participants expected China to “exert pressure” on Iran to reach a deal with the US, according to ING Bank’s analysts.
In recent weeks, traders have balanced de-escalation signals against persistent attacks on vessels in the Strait of Hormuz and energy infrastructure in the Middle East, leading to heightened volatility in Brent prices.
Commenting on the latest data, ING Bank’s analysts said, “speculators likely took some risk off the table ahead of the Trump-Xi meeting, in case there were any Iran-related breakthroughs.”
When speculators reduce net-long positions, prices tend to decline. Conversely, when they boost these positions, oil prices typically rise, leading to a cycle where their actions can influence oil prices and the market.
By Aparupa Mazumder
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