Speculators reduce net-long positions in Brent
Money managers and hedge funds have decreased their net-long bets on ICE Brent futures in the week to 5 May.
IMAGE: Oil storage tanks. Getty Images
Speculators sold 9,000 lots as of last Tuesday, decreasing net-long positions in Brent futures to about 374,000 lots.
Meanwhile, gross-long positions in Brent futures gained by a little over 4,600 lots during the week, according to futures and options data from ICE Futures Europe.
Commenting on the latest data, two analysts from ING Bank noted the move was “dominated by fresh shorts entering the market.”
The move comes amid some hopes of a ceasefire between the US and Iran, after Washington submitted a one-page peace proposal that could cease all hostilities in the Middle East and open the Strait of Hormuz for commercial vessel transits.
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.
“Given the market's move lower since last Tuesday, this net long has likely been further reduced,” ING Bank analysts said.
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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