Hedge Funds Boost Bullish Stance in Brent Crude to 5-Year High

  • Net-long positions increase by 31,346 contracts: ICE Futures
  • WTI shows different trend as net-longs decline by 4.8%

What's Changed in the Way Oil Is Priced?

Hedge funds boosted their bullish stance in Brent crude to the highest in at least five years as prices near $30 a barrel drew speculative buyers.

Money managers increased net-long positions -- that is, the number of additional contracts they bought versus those sold -- by 31,346 contracts to 292,300 in the week to Feb. 2, according to data from ICE Futures Europe. That’s the highest in data that goes back to January 2011. Each contract represents 1,000 barrels.

“What an amazing jump,” said Ole Sloth Hansen, an analyst at Saxo Bank A/S in Copenhagen. “Traders are clearly looking for a bottom around here. The sense has been spreading that the downside was being reduced, with most of the bad news related to supply being priced in.”

Brent futures, a benchmark used around the world, gained 2.9 percent to $32.72 a barrel in the week to Feb. 2. Prices climbed as a slide in the dollar drew investors to commodities and as Venezuela attempted to broker a supply agreement between OPEC and other producers. The grade has since gained another 2 percent, trading at about $33 a barrel in London on Monday.

“Low prices seem to attract further speculative buying in the light of weaker U.S. dollar,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt.

A different trend appeared last week for the U.S. benchmark West Texas Intermediate. While speculators increased their cumulative wagers to a record, net-longs declined by 4.8 percent.

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