X
<

World Bank Thinks OPEC Production Freeze Will Impact Crude Oil

PART:
1 2 3 4 5 6 7 8
Part 7
World Bank Thinks OPEC Production Freeze Will Impact Crude Oil PART 7 OF 8

Hedge Funds Are Bullish on US Crude Oil ahead of OPEC Meeting

Hedge funds

On October 21, 2016, the CFTC (U.S. Commodity Futures Trading Commission) released its weekly Commitments of Traders report. It reported that hedge funds increased their net long positions in WTI (West Texas Intermediate) crude oil futures and options contracts for the fifth time in the last six weeks in the week ended October 18, 2016.

Hedge Funds Are Bullish on US Crude Oil ahead of OPEC Meeting

Interested in NOG? Don't miss the next report.

Receive e-mail alerts for new research on NOG

Success! You are now receiving e-mail alerts for new research. A temporary password for your new Market Realist account has been sent to your e-mail address.

Success! has been added to your Ticker Alerts.

Success! has been added to your Ticker Alerts. Subscriptions can be managed in your user profile.

Net long positions rose by 3,511 contracts to 291,453 contracts for the week ended October 18, 2016, compared to the previous week. It was the highest level since May 12, 2015. Crude oil prices rose 0.90% in the last week compared to the previous week.

For more on crude oil prices, read Part 1 and Part 3 of this series. Hedge funds are bullish in US crude contracts ahead of the OPEC (Organization of the Petroleum Exporting Countries) meeting. For more on this meeting, read Part 4 of this series.

Commercial and noncommercial traders

The CFTC divides traders into two categories: commercial and noncommercial. Hedge funds are noncommercial traders, while oil producers and consumers are commercial traders. Commercial traders use the futures and options markets for hedging activity to offset crude oil price volatility.

Open interest

Open interest for WTI crude oil futures and options contracts fell for the third time in the last five weeks in the week ended October 18, 2016. It rose 171,472 to 2,596,994 contracts from October 11–18, 2016. Open interest for WTI crude oil futures peaked at 2,768,466 contracts in the week ended October 11, 2016.

Impact on energy stocks and ETFs

Hedge funds’ bullishness or bearishness can impact crude oil prices, which can impact the revenues of oil and gas producers such as Northern Oil & Gas (NOG), SM Energy (SM), and W&T Offshore (WTI).

Crude oil prices also impact ETFs such as the VelocityShares 3x Inverse Crude Oil ETN (DWTI), the PowerShares DB Crude Oil Double Short ETN (DTO), the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), the SPDR S&P Oil & Gas Equipment & Services ETF (XES), the ProShares Ultra Bloomberg Crude Oil (UCO), and the Vanguard Energy ETF (VDE).

In the last part of this series, we’ll take a look at some crude oil price forecasts.

X

Please select a profession that best describes you: