Hedge funds have turned increasingly bullish on crude oil, with positioning in Brent reaching its highest level since April as geopolitical tensions with Iran and severe winter weather in the US tightened near-term supply expectations, according to a report by Bloomberg citing data from ICE Futures Europe.
The figures show that money managers increased net long-only positions in Brent by 19,409 contracts to 377,371 lots in the week to 27 January. Bullish bets on US benchmark WTI also climbed to a six-month high, figures from the Commodity Futures Trading Commission show.
Sentiment was boosted after US President Donald Trump said a “flotilla” was heading to the Middle East, raising fears of potential military action involving Iran, which produces around 3.3 million barrels per day, roughly 3% of global supply.
Geopolitical risk fed through into oil market structure, with prompt spreads in both Brent and WTI moving deeper into backwardation and bullish options remaining unusually expensive relative to bearish contracts.
At the same time, extreme cold weather in the US disrupted refining activity and curtailed domestic output. Winter Storm Fern shut in close to 2 million barrels per day of US production at its peak, according to Energy Aspects, adding to near-term supply concerns.
The cold snap also prompted a sharp shift in distillates positioning, with hedge funds flipping to net bullish diesel exposure as demand for heating fuel surged. CFTC data show long diesel positions exceeded short positions by 10,612 contracts.
Money managers increased net long-only positions in Brent by 19,409 contracts to 377,371 lots in the week to 27 January, according to ICE Futures Europe data. Bullish bets on US benchmark WTI also climbed to a six-month high, figures from the Commodity Futures Trading Commission show.
