The downward trend in oil prices continued in the last days of 2023 despite a bout of short-covering by hedge funds in the final two weeks of the year as portfolio managers squared up some crude short positions, according to a report by Reuters.

The equivalent of 68 million barrels in the six most important futures and options contracts were purchased by hedge fund and other money managers over the seven days ending 26 December, with purchases over the last two weeks of the year totalling 175 million barrels, partially reversing sales of 473 million over the previous 12 weeks.

Crude saw the highest activity at +155 million barrels, compared with fuels (+19 million) as managers unwound previous bearish bets.

Prior to the year-end buying, the net position across all three crude contracts had been reduced to a record low of 128 million barrels on 12 December.