Hedge Funds Soured on Oil as OPEC Agreed to Bumper Supply Hike
(Bloomberg) -- Hedge funds turned the least bullish on Brent crude in about six months as OPEC+ agreed to a second major production increase, inflaming concerns that the extra supply could lead to a global glut.
Money managers reduced their net-long position on Brent by 12,383 lots to 97,558 lots in the week ended May 6, the lowest since October, weekly ICE Futures Europe data on futures and options show. Short-only bets against West Texas Intermediate rose by the most since March, according to the Commodity Futures Trading Commission.
Oil tumbled to a four-year low last week after OPEC and its allies announced an additional 411,000 barrels a day of supply for June. The market was already on edge when the meeting that eventually ratified the surge was advanced by two days to Saturday, while Saudi Arabia signaled a higher tolerance for a sustained period of low prices. The Riyadh-led move forced Wall Street like Goldman Sachs and Morgan Stanley to shave their price forecasts, some not for the first time this year.
Since then, prices have partially rebounded on signs that domestic production may contract in the months ahead and as the US inked a trade deal with the UK, the first of Trump’s promised agreements.
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