Column: Lower oil prices prompt hedge fund short-covering – Reuters

SectorOil & Gas

A petrol station attendant prepares to refuel a car in Rome, Italy, January 4, 2012. REUTERS/Max Rossi/File Photo

LONDON, July 19 (Reuters) – Faltering oil prices, triggered by concern over a third wave of the novel coronavirus and increased confidence OPEC+ would boost production, gave portfolio managers a chance to book profits on tactical short positions.

Hedge funds and other money managers purchased the equivalent of 24 million barrels in the six most important petroleum futures and options contracts in the week to July 13.


The buying partially reversed larger sales of 63 million barrels the week before, position records published by ICE Futures Europe and the U.S. Commodity Futures Trading Commission show.

But most of the buying consisted of repurchases of previous short sales (+15 million barrels) rather than the initiation of new long positions (+8 million), implying it was motivated by profit-taking after prices fell.

Purchases were spread across NYMEX and ICE WTI (+11 million barrels), Brent (+9 million), U.S. more...