Hedge funds actively buying oil, petroleum products
Hedge funds, which sold oil this summer due to fears of a new wave of the pandemic and the return of Iranian barrels to the market, have started to actively buy hydrocarbons, Report informs referring to Finanz.ru.
Over the past week, major speculators purchased futures and options for oil and oil products in the amount of 42 million barrels, Reuters analyst John Kemp calculated based on data from European and American exchanges.
Over the past six weeks, contracts for 170 million barrels have settled on the balance sheets of hedge funds, and their net long position (the difference between the growth and fall rates) reached 847 million barrels, a record since March.
Commodity fund managers were actively selling oil in June and July, dumping 260 million barrels of contracts. But in the fall, due to the energy crisis in Europe, unprecedented gas prices and the soaring cost of coal to a 20-year high, investors again began to show interest in hydrocarbons.
Hedge fund rates for the fall in Brent crude prices on September 27 fell to a minimum in two years (62 million barrels), and the volume of long positions exceeded short ones by more than 6 times.
Last week, hedge funds added contracts for 21 million barrels of WTI crude oil, 9 million barrels of Brent, 11 million barrels of gas oil and 3 million barrels of gasoline to their portfolios, reducing positions only in diesel futures by 3 million barrels.
Since the beginning of the year, oil has risen in price by 40 percent: Brent, to which supplies to Europe are tied, traded at more than $82 per barrel for the first time since 2018. The WTI benchmark blend is approaching the $80 level, a seven-year record.
Investment banks, meanwhile, one by one, are raising their forecasts for oil.
Back in September, Bank of America predicted prices at $100 per barrel under the condition of a cold winter, which will force European countries to use fuel oil for heating. Now the bank says prices above $100 are possible, taking into account the rise in prices for gas and coal to new highs – $1,400 per 1,000 cubic meters and $242 per ton, respectively.
Goldman Sachs raised its year-end forecast by $10 to $90 a barrel for Brent crude, citing rising demand, the collapse of American production due to Hurricane Ida, and a physical market deficit that widens as the heating season approaches.
Morgan Stanley predicts prices around $85 per barrel by the end of this year due to the rapid decline in global stocks, which have already fallen to levels below the level at the beginning of the pandemic.
Switching from too expensive gas to oil can increase demand by 1-2 million barrels per day, and by another 500,000 barrels per day will if the winter is colder than usual, and almost the same (300,000-500,000 barrels per day) if air traffic is fully restored in the US, the expert said.
The oil market is already in the short supply: according to OPEC estimates, world production by 1.1 million barrels per day falls short of consumption, and the gap is covered by reserves, the total volume of which has fallen below the average over the past five years.
“If all these factors come together, oil prices could spike and lead to a second round of inflationary pressures around the world,” analysts including Francisco Blanch wrote in the note. “Put differently, we may just be one storm away from the next macro hurricane.”
This morning the price of December futures for Brent crude oil fell by 0.46 percent – to $80.71 per barrel, the price of November futures on WTI crude fell by 1.06 percent, to $76.61 per barrel.