Are Hedge Funds Turning Bullish on WTI Crude Oil?
The U.S. Commodity Futures Trading Commission published its “Commitment of Traders” report on December 1, 2017. It estimated that hedge funds increased their net bullish bets in WTI (West Texas Intermediate) crude oil (SCO) (DBO) futures and options by 52,644 contracts or 15% to 396,484 contracts on November 21–28, 2017. Positions rose 110% or by 207,398 contracts from the same period in 2016.
Hedge funds’ net long bets on WTI oil (USL) (UCO) futures and options were at a nine-month high. It indicates that hedge funds are turning bullish on WTI oil (DWT) prices. Higher oil prices benefit energy producers (XLE) like Northern Oil & Gas (NOG), Chevron (CVX), Devon Energy (DVN), and QEP Resources (QEP).
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Crude oil price forecasts
Goldman Sachs increased the forecast for crude oil prices in 2018 after OPEC’s meeting in November 2017. It forecast that Brent oil prices will average $62 per barrel in 2018, which was previously estimated at $58 per barrel. Goldman Sachs also forecast that WTI crude oil prices will average $57.50, which was previously estimated at $55 per barrel. The extension of current production cuts until December 2018 led to the increase in crude oil prices forecasts. However, the US crude oil production will weigh on prices in 2018.
Brent and WTI crude oil (UWT) prices could average $55.61 per barrel and $51.04 per barrel in 2018, according to the EIA.
Read Key Catalysts for US Natural Gas Prices Next Week and How US Tax Bill and OPEC Could Affect Crude Oil Prices for updates on natural gas and oil.