23 May

Hedge Funds Cut Net Long Positions in WTI Crude Oil

WRITTEN BY Gordon Kristopher

Hedge funds 

Hedge funds’ net long positions in US crude oil futures and options contracts trading in NYMEX and ICE declined by 15,322 to 419,907 on May 8–15—the lowest level in the last six months. The CFTC released the data on May 18.

WTI crude oil futures have increased ~1.3% since May 15. The prices increased partly due to geopolitical tension and ongoing supply cuts. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and the Vanguard Energy ETF (VDE) have increased ~5.4% and ~2.4%, respectively, since May 15. XOP aims to follow the performance of the S&P Oil & Gas Exploration & Production Select Industry Index. VDE aims to follow the performance of an index of energy stocks. HighPoint Resources (HPR), Denbury Resources (DNR), and Extraction Oil & Gas (XOG) account for ~2.9% of XOP’s holdings. These stocks have risen ~20%, ~18%, and 15% since May 15. These stocks were the top percentage gainers in XOP’s portfolio during the same period.

Hedge Funds Cut Net Long Positions in WTI Crude Oil

Crude oil price forecasts  

Wall Street Journal survey of 14 investment banks estimated that Brent and WTI crude oil prices would average $64 per barrel and $60 per barrel, respectively, in 2018.

A Reuters poll estimated that Brent and WTI oil prices could average $67.4 per barrel and $63.23 per barrel, respectively, in 2018.

WTI and Brent oil prices averaged $50.79 per barrel and $54.15 per barrel in 2017. The EIA estimates that Brent and WTI oil prices could average $70.68 per barrel and $65.58 per barrel, respectively, in 2018.

New sanctions on Iran and Venezuela, supply cuts, and strong demand could support oil prices in 2018. However, record US oil production could pressure oil prices in 2019 if supply shocks ease.

Read WTI Crude Oil Prices Could Hit $75 per Barrel and Rising Crude Oil Prices Could Impact US Natural Gas Futures for the latest updates on crude oil and natural gas.

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