Vaccine trials temper hedge funds’ oil pessimism: Kemp

SectorFinancial Markets

(John Kemp is a Reuters market analyst. The views expressed are his own)LONDON- Hedge funds raced to buy back short positions in crude and products last week after Pfizer’s announcement of a successful coronavirus vaccine trial prompted hope for a recovery in consumption next year.Fund managers purchased the equivalent of 114 million barrels in the six most important petroleum futures and options contracts in the week to Nov. 10, position records from regulators and exchanges showed.Purchases were at the fastest rate since the middle of April, when Saudi Arabia and Russia agreed to end their volume war, causing funds to buy 122 million barrels.For the most part, portfolio managers last week purchased crude and products to close out previous bearish short positions (+89 million barrels) rather than initiating new bullish long positions (+25 million).Buying was broadly spread across Brent (+36 million barrels), NYMEX and ICE WTI (+23 million), U.S. gasoline (+18 million), U.S.

diesel (+15 million) and European gasoil (+22 million).In almost all cases, except U.S. gasoline, buying was concentrated on repurchasing of previous short positions rather than opening new long ones.Pfizer’s announcement increased the probability of a business cycle upturn and a resumption of international passenger aviation more...