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LONDON, April 25 (Reuters) – Portfolio traders bought petroleum final week for the primary time in 4 weeks, however total positioning remained subdued by the excessive value of margin and huge uncertainties surrounding each crude provide and demand.
Hedge funds and different cash managers purchased the equal of 14 million barrels within the six most necessary petroleum-related futures and choices contracts within the week to April 19.
However the place has remained unchanged since mid-March as opposing considerations in regards to the sanctions-related lack of manufacturing from Russia and lockdown-related lack of consumption in China have cancelled one another out.
The mixed web lengthy place of 553 million barrels is in solely the thirty ninth percentile for all weeks since 2013 whereas the ratio of lengthy to brief positions at 4.59:1 is considerably greater within the 59th percentile.
Fund managers stay reasonably bullish in regards to the outlook for costs however excessive volatility has made it dangerous and costly to take care of present positions or provoke new ones.
Reflecting greater margin calls, the whole variety of open futures positions for all classes of dealer is the bottom for seven years, though it has stabilised within the final fortnight after falling sharply since mid-February.
The newest week confirmed hedge funds shopping for Brent (+27 million barrels), U.S. gasoline (+3 million) and U.S. diesel (+1 million) however promoting NYMEX and ICE WTI (-16 million) and European fuel oil (-1 million).
Fund managers rotated out of WTI into Brent, probably reflecting the large provide of additional barrels from the Strategic Petroleum Reserve in america and doable European Union sanctions on imports from Russia.
General, funds are way more bullish for center distillates and different refined merchandise than for crude, reflecting pressure on the refining system from robust demand for diesel and fuel oil by producers and freight companies.
– Funds promote oil as financial weak spot trumps sanctions (Reuters, April 11) learn extra
– Hedge funds wrestle with triple uncertainties on oil (Reuters, April 4) learn extra
– White Home makes use of oil reserve to put a large unfold commerce (Reuters, April 1) learn extra
– China’s cooling financial system takes some warmth out of commodity costs (Reuters, March 31) learn extra
– Hedge fund oil positions caught between dangers from sanctions and recession (Reuters, March 29) learn extra
John Kemp is a Reuters market analyst. The views expressed are his personal
Reporting by John Kemp; Enhancing by Emelia Sithole-Matarise
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