Portfolio investors were small buyers of crude oil and distillates last week but overall their positions have not changed in the last three months as concerns about the health of the global economy offset lean inventories.
Hedge funds and other money managers purchased the equivalent of 25 million barrels in the six most important petroleum futures and options contracts over the seven days ending on June 20.
The combined position was 346 million barrels (12th percentile for all weeks since 2013) which was essentially unchanged from 350 million barrels on March 28 after the eruption of the U.S. regional banking crisis.
There has been no enduring change in positions despite production cuts announced by Saudi Arabia and its allies in OPEC+.
Chartbook: Oil and gas positions
In the most recent week, funds bought Brent (+16 million barrels), NYMEX and ICE WTI (+5 million) and European gas oil (+9 million) but sold U.S. gasoline (-2 million) and U.S. diesel (-4 million).
The position in crude (268 million barrels, 8th percentile) is basically unchanged since late March and the position in middle distillates (22 million barrels, 29th percentile) is unchanged since early April.
Production cuts announced by Saudi Arabia and the rest of OPEC+ should reduce the amount of crude available later in the third quarter.
But economic growth is decelerating across North America, Europe and China, dampening expected consumption of oil.
Most measures of inventories and calendar spreads imply the crude and products markets are broadly balanced at present.
U.S. NATURAL GAS
Investors became a little more bullish about U.S. gas prices last week even though surplus inventories continued to rise.
Hedge funds and other money managers purchased the equivalent of 281 billion cubic feet of gas over the seven days ending on June 20.
The total position rose to 275 billion cubic feet net long (39th percentile for all weeks since 2006), the highest for 12 months since June 2022.
Funds became more bullish even though inventories were still 291 billion cubic feet (+12% or +0.74 standard deviations) above the prior ten-year seasonal average.
Related columns:
- Frustrated oil bulls made to wait for price recovery (June 22, 2023)
- Funds rotate positions from crude oil to distillates (June 19, 2023)
- Global distillate stocks low despite industrial slowdown (June 13, 2023)
- Oil investors ignore Saudi production cut (June 12, 2023)
John Kemp is a Reuters market analyst. The views expressed are his own
