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Hedge Funds Decreased Net Long Positions in WTI Crude Oil

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Hedge funds  

Hedge funds’ net long positions on WTI crude oil futures and options contracts decreased 4.3% to 446,023 on February 27–March 6, 2018. The net long positions fell for the fifth time in the last six weeks.

Hedge funds could be reducing their net long positions on WTI crude oil futures and options contracts due to record US crude oil production. US crude oil prices have declined ~7.8% since January 26, 2018, due to record US oil production and a rise in US oil inventories.

The Energy Select Sector SPDR ETF (XLE) and the iShares U.S. Energy ETF (IYE) have fallen ~11.7% and ~11.5%, respectively, since January 26, 2018. XLE tracks the performance of the Energy Select Sector Index. IYE tracks the performance of an index of energy stocks.

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Crude oil price forecasts 

Wall Street Journal survey of investment banks estimates that US crude oil prices could average $58 per barrel in 2018. The poll also estimates that Brent crude oil prices could average $62 per barrel during the same period.

A Reuters poll estimates that WTI oil prices could average $58.88 per barrel in 2018. The poll estimates that Brent oil prices could average $63 per during the same period.

WTI and Brent crude oil prices averaged $50.79 per barrel and $54.15 per barrel in 2017. The EIA estimates that WTI oil prices could average $58.17 per barrel in 2018 and $57.51 per barrel in 2019. Brent oil prices could average $62.13 per barrel in 2018 and $61.51 per barrel in 2019, according to the EIA.

Ongoing supply cuts, a decline in global oil inventories, and strong demand could benefit oil prices in 2018. However, record US oil production could pressure crude oil prices in 2018.

Read Which Drivers Could Limit the Upside for Crude Oil Futures? and EIA Downgraded Natural Gas Prices for 2018 for the latest updates on crude oil and natural gas.

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