Speculators increase 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 January.

IMAGE: Oil pump jack. Getty Images

Speculators bought more than 8,500 lots as of last Tuesday, increasing net-long positions in Brent futures to over 210,000 lots.

Meanwhile, gross-long positions in Brent decreased by a little over 9,000 lots during the week, according to futures and options data from ICE Futures Europe.

The uptick in net-long holdings reflects increased short covering rather than fresh long buying.

The development highlights a cooling of market fears around geopolitical risks in Iran, with analysts saying the risk of an imminent US intervention now appears to be fading.

Iran is the fourth-largest OPEC member, producing around 3.2 million b/d of crude oil. A US intervention could threaten oil supply flows from the Middle East.

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

By Aparupa Mazumder

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