Speculators reduce net-long positions in Brent

Money managers and hedge funds have cut their net-long bets on ICE Brent futures in the week to 19 May.

IMAGE: Oil storage facility. Getty Images

Speculators sold over 10,000 lots as of last Tuesday, decreasing net-long positions in Brent futures to about 335,000 lots.

“The move was dominated by fresh shorts entering the market,” two analysts from ING Bank said.

The move came amid some hopes of a permanent peace deal between the US and Iran, with key Iranian negotiators travelling to Qatar to push negotiations toward a final stage.

Oil market participants have balanced de-escalation signals against persistent attacks on vessels in the Strait of Hormuz and energy infrastructure in the Middle East lately, leading to heightened volatility in Brent’s price.

Commenting on the latest data, ING Bank’s analysts said, “this [increase in gross-short positions] suggests growing optimism, or at least hope, for an imminent deal between the US and Iran.”

Meanwhile, gross-long positions in Brent futures increased by a little short of 3,000 lots during the week, according to futures and options data from ICE Futures Europe.

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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