Hedge funds raised their bullish bets on US crude oil, data showed on Friday, amid expectations that oil prices finally may have bottomed, after a global supply glut has sent prices plunging to 12-year lows.
Money managers, including hedge funds and other big speculators, raised their combined futures and options position in New York and London by 15,717 contracts to 68,053 in the week to January 26, the US Commodity Futures Trading Commission (CFTC) said.
The data represented the second consecutive week in which money managers had extended their position in the market.
“It looked as if up to last Tuesday, you had a big influx of money-manager longs — that would explain why up until Tuesday last week, the market was firm,” said Gene McGillian, senior analyst at Tradition Energy in Stamford Connecticut.
“There were some bottom-pickers that showed up.”
Gross managed long positions rose to its highest level since June 2015, in a sign that the market’s overly bearish sentiment may be coming to an end.
Oil prices have indeed rebounded, rising more than 25 per cent from the 12-year lows touched last week after the Organisation of the Petroleum Exporting Countries (Opec) renewed calls for rival producers to cut supply alongside its members.
Analysts have said oil prices could rally as high as $45 by year-end as non-Opec supply reduces and global demand improves.
US oil production fell in November for the second straight month, data from the Energy Information Administration showed and energy firms cut oil rigs for the sixth straight oil services company Baker Hughes Inc said.