In a notable reversal, hedge funds have shifted their stance on oil, expressing bullish sentiment for the first time in almost three months. The increased optimism comes in the wake of heightened geopolitical risks to global energy shipments, contributing to a rebound in oil prices.
According to data from ICE Futures and the Commodity Futures Trading Commission, money managers substantially increased their net long positions in the West Texas Intermediate (WTI) benchmark, totaling 109,723 lots. This positive turn follows the most bearish stance recorded just the previous week. The shift toward bullish positions was primarily fueled by a significant 32,678 lot decrease in short positions.
The bullish move coincided with oil’s largest weekly gain in months, driven by Houthi militant attacks in the Red Sea, posing a threat to months of potential disruptions in the energy market. However, despite the short-term positive momentum, the longer-term outlook for crude remains challenging. The United States is poised for record oil output next year, and the anticipation of slowing demand gains adds complexity to the overall market dynamics.
