Hedge funds sharply reduced their exposure to oil during June as crude prices retreated from their recent highs, although tight refined fuel markets suggest physical supply constraints remain in place despite the sell-off, according to a report by Crux Investor.
The report cites OPEC market data as showing that money managers sold the equivalent of 245 million barrels of Brent and WTI crude futures and options during the month, helping drive one of the largest monthly declines in oil prices since geopolitical tensions escalated earlier this year.
ICE Brent crude averaged $84.43 per barrel in June, down $19.28 from the previous month, while NYMEX WTI averaged $81.79 per barrel, a decline of $16.72.
The reduction in speculative positioning saw hedge funds’ net long exposure in Brent fall by around 80%, leaving combined Brent and WTI bullish positions at their lowest level since January 2026.
Despite the sharp fall in futures prices, several indicators suggest the underlying physical oil market remains relatively tight.
Forward curves for Brent, WTI and Oman crude all remained in backwardation throughout June, with prompt deliveries continuing to trade above future contracts, typically a sign of constrained near-term supply.
Commercial oil inventories across OECD countries also continued to decline. OPEC data showed stocks fell by 21.8 million barrels in May to 2.77 billion barrels, leaving inventories nearly 49 million barrels below their five-year average.
While crude prices eased, refined products remained significantly more expensive.
US diesel prices averaged approximately $121 per barrel during June, around 42% higher than February levels, while jet fuel averaged roughly $127 per barrel, remaining almost 30% above pre-crisis prices.
Analysts attribute the resilience in diesel and jet fuel prices to reduced refinery activity rather than crude shortages alone.
Global refinery throughput remains about five million barrels per day below average 2025 levels after disruptions to crude flows through the Strait of Hormuz earlier this year reduced feedstock availability for refiners, particularly in Asia.
As a result, supplies of middle distillates such as diesel and jet fuel have recovered much more slowly than crude oil prices.
The divergence between falling crude prices and elevated refined fuel costs presents an important signal for commodity-focused hedge funds, many of which monitor refining margins and inventory trends alongside outright oil prices when positioning portfolios.
Although futures markets have priced in some easing of geopolitical risks, tensions in the Gulf remain elevated. Military exchanges involving Iran and the US, together with continued uncertainty over shipping through the Strait of Hormuz, continue to pose risks to global energy supplies.
The report also noted that the OPEC Reference Basket averaged $89.75 per barrel in June after falling nearly $25 during the month. However, the basket remains substantially higher on a year-to-date basis than its 2025 average, underlining that energy prices continue to trade at elevated levels despite June’s correction.
