Money managers have reduced their bullish bets on both Brent and WTI crude futures over the past two weeks despite little progress on a potential reopening of the Strait of Hormuz.
In the latest reporting week to August 4, portfolio managers trimmed their net long position in NYMEX WTI by 7,257 lots to 101,050 lots, data from the exchanges found. The net long position, the difference between bullish and bearish bets, in ICE Brent crude oil futures was slashed by 11%, or by 20,361 lots to 164,722 lots.
This was the second consecutive weekly decline in speculative positions in the two key crude oil futures benchmarks as traders and speculators are hesitant to add more bullish bets on a price rally.
Oil prices have dropped over the past two weeks amid hopes that the Strait of Hormuz could reopen and Iran and Oman could reach a deal on a joint management of some of the lanes.
“Speculative sentiment turned more cautious last week,” ING’s commodities strategists Warren Patterson and Ewa Manthey wrote in a note early on Monday.
According to Ole Hansen, Head of Commodity Strategy at Saxo Bank, the energy complex saw reduced exposure in the weekly Commitment of Traders report through August 4 despite persistent supply risks.
“Renewed price weakness drove a 25k reduction in the combined crude net long to 266k contracts, following 171k of net buying during the previous three weeks,” Hansen said.
“Despite persistent geopolitical supply risks, positioning continues to signal limited conviction in a sustained price rally,” the commodity expert noted.
Meanwhile, crude oil prices began this week with a gain following a statement by Iran setting six demands for a peace deal with the United States and claims from the Houthis that they had struck an Aramco refinery in Jazan.
As of 10:00 a.m. ET, the Brent front-month futures were up by 2.70% at $85.81. The U.S. benchmark, WTI Crude, was trading 2.69% higher at $80.28.
