(Bloomberg) — Hedge funds turned bullish on oil at the fastest pace in three months as geopolitical unrest in key producing regions of the world revived the risk premium in crude prices.
Money managers increased their net-long stance on West Texas Intermediate by 26,247 lots to 38,904 lots in the week ended Sept. 16, the largest gain since June, according to the US Commodity Futures Trading Commission. The net increase was largely driven by a drop in bearish bets in both US and Brent crude. Short-only wagers on Brent tumbled to a six-week low, data from ICE Futures Europe show.
Geopolitical risks have returned to the fore in recent weeks as Israeli Defense Forces targeted Hamas leaders in Doha, raising concerns that flows from the Middle East, the source of about a third of the world’s supplies, would be reduced. Ukrainian drone strikes against Russian energy assets, meanwhile, continue to threaten Moscow’s oil flows.
The latest stance from speculators represents a marked shift from last week, when investors turned the least bullish on US crude on record after OPEC+ agreed to raise production yet another time. Prices have been in a tug-of-war pattern for weeks as traders take in conflicting signals on supply and weigh them against the outlook for a widely anticipated glut.
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