Portfolio investors purchased petroleum last week for the first time in four weeks, but overall positioning remained subdued by the high cost of margin and large uncertainties surrounding both crude supply and demand.
Hedge funds and other money managers bought the equivalent of 14 million barrels in the six most important petroleum-related futures and options contracts in the week to April 19.
But the position has remained unchanged since mid-March as opposing concerns about the sanctions-related loss of production from Russia and lockdown-related loss of consumption in China have cancelled each other out.
The combined net long position of 553 million barrels is in only the 39th percentile for all weeks since 2013 while the ratio of long to short positions at 4.59:1 is somewhat higher in the 59th percentile.
Fund managers remain moderately bullish about the outlook for prices but extreme volatility has made it risky and expensive to maintain existing positions or initiate new ones.
Reflecting higher margin calls, the total number of open futures positions for all categories of trader is the lowest for seven years, although it has stabilized in the last fortnight after falling sharply since mid-February.
The most recent week showed hedge funds buying Brent (+27 million barrels), U.S. gasoline (+3 million) and U.S. diesel (+1 million) but selling NYMEX and ICE WTI (-16 million) and European gas oil (-1 million).
Fund managers rotated out of WTI into Brent, likely reflecting the massive offer of extra barrels from the Strategic Petroleum Reserve in the United States and possible European Union sanctions on imports from Russia.
Overall, funds are much more bullish for middle distillates and other refined products than for crude, reflecting strain on the refining system from strong demand for diesel and gas oil by manufacturers and freight firms.
Recommended Reading
TGS, SLB to Conduct Engagement Phase 5 in GoM
2024-02-05 - TGS and SLB’s seventh program within the joint venture involves the acquisition of 157 Outer Continental Shelf blocks.
2023-2025 Subsea Tieback Round-Up
2024-02-06 - Here's a look at subsea tieback projects across the globe. The first in a two-part series, this report highlights some of the subsea tiebacks scheduled to be online by 2025.
StimStixx, Hunting Titan Partner on Well Perforation, Acidizing
2024-02-07 - The strategic partnership between StimStixx Technologies and Hunting Titan will increase well treatments and reduce costs, the companies said.
Tech Trends: Autonomous Drone Aims to Disrupt Subsea Inspection
2024-01-30 - The partners in the project are working to usher in a new era of inspection efficiencies.
Drilling Tech Rides a Wave
2024-01-30 - Can new designs, automation and aerospace inspiration boost drilling results?