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 26 May.

IMAGE: Oil storage tanks. Getty Images

Speculators sold over 56,000 lots as of 26 May, decreasing net-long positions in Brent futures to a little short of 279,000 lots.

The move was dominated by fresh shorts entering the market. Gross-long positions in Brent futures also decreased by about 31,000 lots during the week, according to futures and options data from ICE Futures Europe.

The decline in net-long bets came amid some hopes of a permanent peace deal between the US and Iran, that is expected to reopen the Strait of Hormuz to commercial vessel traffic.

In recent weeks, the global oil market has balanced de-escalation signals against sustained attacks on commercial vessels and energy infrastructure in the Middle East, leading to heightened volatility in Brent’s price.

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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