Oil bulls double down on rally with highest bets since October

New York: Hedge funds are betting rising tensions around the globe will keep fuelling oil’s rebound this year.

Money managers boosted optimistic wagers on West Texas Intermediate crude to the highest since October in the week ended April 16, according to government data released Friday. Total long and short positions swelled to the most in six months, a sign the rally is luring back investors after 2018’s late-year crash. The US benchmark has jumped about 40 per cent this year.

Oil has wavered since nearing $65 a barrel in New York for the first time in five months on April 9. While Opec output cuts have pushed prices higher, it’s unclear how long the group and its partners will sustain the curbs. The Trump administration, meanwhile, faces a pivotal decision on Iranian sanctions, and conflicts in Libya, Algeria and Venezuela remain wild cards.

“You could see the balance swing a few million barrels in either direction in the next few weeks,’ said Leo Mariani, an analyst at KeyBanc Capital Markets. “The potential for more supply outages is incredibly high, but the market is also increasingly uncertain.’

The net-long WTI position — the difference between bets on higher prices and wagers on a decline — rose 10 per cent to 303,366 futures and options contracts, the US Commodity Futures Trading Commission said. Long positions climbed 8.4 per cent, while shorts declined 6.5 per cent.

Net-length in WTI remains “relatively low’ by historical standards, said Daniel Ghali, a TD Securities commodities strategist, signalling more volatility could be ahead.

“Money managers have a lot of room to increase their length,’ he said. “The short side might also increase to a lesser extent because prices are now trading above $60 a barrel, which for some people suggests that they might have overshot.”