Speculators hike net-long positions in Brent

Money managers and hedge funds have increased their net-long bets on ICE Brent futures in the week to 20 May, driven by some fresh long positions entering the global oil market.

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Speculators bought about 12,000 lots as of last Tuesday, hiking net-long positions in Brent futures to a little over 160,000 lots, according to futures and options data from ICE Futures Europe.

The increase in net-long positions was somewhat driven by fresh longs entering the market, according to two analysts from ING Bank. The gross-long positions in Brent gained by nearly 22,000 lots higher during the week.

Speculative trading occurs when money managers and hedge funds invest based on expectations of future price movements. The growth in buying interest “might be due to fading hopes of an Iranian nuclear deal,” ING Bank analysts noted.

Oil prices have gained some support in recent days as prospects of a US-Iran nuclear agreement have largely faded.

Both nations concluded a fifth round of talks last week, that showed “some but not conclusive progress” according to media reports. Tehran has not agreed to stop its nuclear enrichment programs, Reuters reported, adding that no timeline has been set for the sixth round of talks with Washington.

Further commenting on the latest trend, ING Bank analysts said that while the week saw some fresh long positions entering the market, “some speculators are selling the market.”

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 oil prices and the market.

By Aparupa Mazumder

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