Hedge funds’ combined net-bullish position in Brent (BNO) and WTI crude oil increased by 37 MMbbls (million barrels) to a record 1,113 MMbbls for the week ending January 16, 2018. The net positions include crude oil contracts traded in NYMEX and ICE. The increase suggests that hedge funds are bullish on crude oil (USO) (UCO) prices. Crude oil prices are at a three-year high. Higher oil prices favor energy producers (XOP) (VDE) like Northern Oil & Gas (NOG), ExxonMobil (XOM), and Contango Oil & Gas (MCF).
Crude oil price forecasts
Hedge funds’ combined net-bullish position in Brent and WTI crude oil has increased by 755 MMbbls since the end of June 2017. The rise in net-long positions has been partly due to ongoing production cuts.
BBL Commodities is one of the largest oil hedge funds in the world. BBL Commodities expects that Brent crude oil prices could hit $80 per barrel in 2018. Prices could rise due to the decline in OECD crude oil inventories. Inventories could decline due to strong global oil demand and production cuts.
Meanwhile, Barclays estimates that Brent crude oil prices could average $60 per barrel from the previous estimates of $55 per barrel. The decline in production from Venezuela and strong demand would help oil prices.
Goldman Sachs predicts that Brent and WTI crude oil (UCO) prices could average $62 and $57.5 per barrel in 2018. Société Générale estimates that Brent and WTI crude oil (USL) prices could average $62 and $57.75 per barrel during the same period. However, a rise in the US and non-OPEC crude oil production in 2018 could cap the upside for oil prices.
Read Production Cuts and Crude Oil Inventories Could Impact Oil Prices and Can OPEC and Natural Gas Production Support Natural Gas Bears? for updates on oil and gas.