Oil bulls encouraged by low inventories: Kemp

Oil bulls encouraged by low inventories: Kemp

LONDON- Portfolio investors added to their bullish positions in petroleum for the fifth week running as the worst of the latest wave of coronavirus infections passed and governments began to lift restrictions on business and travel.

Hedge funds and other money managers purchased the equivalent of 33 million barrels of futures and options in the six most important petroleum-related contracts in the week to Jan. 18.

Fund managers have purchased a total of 217 million barrels since Dec. 14, after earlier selling 327 million barrels since Oct. 5, amid mounting fears about the impact of the Omicron variant.

Bullish long positions outnumbered bearish short ones by a ratio of 6.24:1 (in the 80th percentile for all weeks since 2013) last week, up from 3.83:1 (47th percentile) five weeks earlier.

The adjustment came from the creation of fresh bullish long positions (+38 million barrels), but new bearish shorts were also established (+5 million) as a few investors anticipated a reversal of the recent rally.

In the most recent week, funds purchased NYMEX and ICE WTI (+23 million barrels), European gas oil (+8 million) and U.S. gasoline (+3 million), with no change in U.S. diesel, and small sales in Brent (-2 million).

Crude inventories around the NYMEX WTI