Are Hedge Funds Turning Bearish on Crude Oil?
On May 19, 2017, the CFTC (U.S. Commodity Futures Trading Commission) released its weekly Commitments of Traders report. The report showed that hedge funds decreased their net long positions in US crude oil futures and options for the fourth straight week. Hedge funds’ net long positions in US crude oil futures and options contracts fell by 7,520 contracts to 161,294 contracts in the week ending May 16, 2017—compared to the previous week.
Hedge funds’ net long positions are at the lowest level since November 8, 2016, due to the strong bearish drivers we discussed in Part 4 of this series. However, hedge funds’ net long positions hit 413,637 contracts in the week ending February 21, 2017—the highest level ever. Hedge funds might increase their net long positions after an extension of major producers’ production cut deal. For more on the deal, read the Part 1 of this series.
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Crude oil price forecasts
The latest survey of 32 banks shows that WTI (West Texas Intermediate) crude oil prices could average $54.3 per barrel in 2017. Likewise, a survey of 35 banks shows that Brent crude oil prices could average $56.2 per barrel in 2017. US WTI and Brent crude oil prices averaged $43.3 and $43.7 per barrel in 2016, respectively.
Fundamental catalysts discussed in the previous parts of the series suggest that prices could fall more. However, a possible extension of major producers’ production cut deal in 2H17 and early 2018 could drive oil prices higher.
Read Trump, US Dollar, and US Supplies: Will Oil Prices Make a U-Turn? for more on crude oil prices. Read Will Crude Oil Prices Test 3 Digits Again? for more information on crude oil price forecasts.
For more energy-related analysis, visit Market Realist’s Energy and Power page.