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Hedge Funds Reduced Their Bullish Bets on Crude Oil

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Nov. 20 2020, Updated 4:15 p.m. ET

Hedge funds 

On March 17, 2017, the CFTC (U.S. Commodity Futures Trading Commission) released its weekly Commitments of Traders report. It showed that hedge funds decreased their net long positions in US WTI (West Texas Intermediate) crude oil contracts by 86,784 contracts to 288,774 contracts in the week ending March 14, 2017—compared to the previous week.

Hedge funds’ net long positions hit 413,637 contracts in the week ending February 21, 2017—the highest level ever. Hedge funds reduced their net long positions for the third straight week due to:

  • rise in US crude oil rigs to an 18-month high
  • near-record US crude oil inventories
  • rise in US crude oil production to February 2016 high

Crude oil (USO) (SCO) (XLE) prices fell ~10% in the past month. For more on prices and bearish drivers, read Part 4 of this series.

A possible extension of OPEC’s crude oil production cut deal in 2H17 could support oil prices. However, if OPEC doesn’t extend its deal, it could pressure crude oil prices.

Lower crude oil prices have a negative impact on oil and gas producers’ earnings such as Noble Energy (NBL), Chevron (CVX), Northern Oil & Gas (NOG), and Triangle Petroleum (TPLM).

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Crude oil price forecasts 

REYL Bank expects that crude oil prices could trade between $50 and $60 per barrel in 2017. The EIA estimates that US WTI and Brent crude oil prices will average $53.5 per barrel and $54.6 per barrel, respectively, in 2017. It also estimates that US WTI and Brent crude oil prices will average $56.2 per barrel and $57.2 per barrel, respectively, in 2018. US WTI and Brent crude oil prices averaged $43.3 per barrel and $43.7 per barrel in 2016, respectively.

Read What Can Investors Expect in the Crude Oil Market in 2017 and Is the US Delaying the Crude Oil Market’s Rebalance? for more on crude oil prices.

Read Will Crude Oil Prices Test 3 Digits Again? for more information on crude oil price forecasts.

For energy-related analysis, visit Market Realist’s Energy and Power page.

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