A rush to cover bearish short positions by hedge funds and other investors has seen benchmark crude oil prices hit the highest level seen in three months following voluntary OPEC production cuts led by Saudi Arabia, according to a report by Reuters.
The report cites data from the US Commodity Futures Trading Commission and ICE Europe as revealing that hedge funds and other money managers purchased the equivalent of 52 million barrels in the six most important petroleum futures and options contracts over the seven days ending on 25 July, taking the total number of barrels purchased over the four weeks since 27 June to 229 million.
Most of the buying was in contracts linked to crude oil (+169 million barrels) with a particular emphasis on NYMEX and ICE WTI (+132 million).
Bearish short positions meanwhile, were cut by 104 million barrels, while bullish long positions increased by 65 million across the NYMEX and ICE WTI contracts.
Short-covering has helped boost the price of front-month WTI futures from less than $68 on 27 June, to over $81 per barrel on 1 August.
