Hedge funds are scaling back their bullish wagers on crude oil, signalling a more cautious stance, with net-long positions in West Texas Intermediate (WTI) having now fallen for four consecutive weeks, reaching their lowest levels since October, according to a report by Bloomberg.
Speculative bets on Brent crude, meanwhile, saw their sharpest pullback since December, marking a third straight decline.
According to data from ICE Futures Europe and the US Commodity Futures Trading Commission (CFTC), hedge funds are adjusting their portfolios by reducing long positions while simultaneously increasing short bets. This shift suggests that institutional investors are bracing for potential downside risks in oil markets.
Oil prices have been on a downward trend, with WTI posting five straight weeks of losses, its longest losing streak since late 2023. Hedge funds, which often use oil futures as part of macro trading strategies, are now reassessing risk exposure amid US tariffs that could impact global trade flows. Uncertainty over OPEC+ policy, with speculation that planned output hikes may be delayed, is also a factor as is the potential resumption of Iraqi oil exports from its semi-autonomous Kurdistan region.
At the same time, open interest in US crude futures — a key gauge of market participation — has also declined, staying near its lowest levels in three months. This trend highlights reduced hedge fund activity as investors pull back from energy markets.
