Hedge funds slash bullish oil bets to lowest ever amid Opec hike

[NEW YORK] Hedge funds chopped their bullish position on US crude to the lowest on record as the Opec+ alliance’s latest decision to boost production compounded already-gloomy forecasts that the world is heading towards an oil surplus this year. 

Money managers cut their net-long stance on West Texas Intermediate by 14,630 lots to 12,657 lots in the week ended Sep 29, the lowest in data stretching back to June 2006, according to the Commodity Futures Trading Commission. Meanwhile, net-long bets on Brent crude decreased by the most since June, data from ICE Futures Europe show. 

Money managers have turned less bullish on crude for eight out of the past 10 weeks as the market careened towards a global oil glut that’s widely anticipated to unfold in the fourth quarter. The decision by the Organization of Petroleum Exporting Countries (Opec) and its allies last weekend to boost output by 137,000 barrels a day in October, even as summer demand wanes, has further darkened the outlook. 

That gloom has been reinforced by two of the world’s most prominent energy forecasters. The US Energy Information Administration projected that inventories already will start building up in the current quarter, while the International Energy Agency this week projected a record oil supply surplus next year. 

US government data last week showed the country’s crude and fuel stockpiles gained the most since July 2023, pointing to a softening domestic market. Meanwhile, weak patches of jobs data are roiling longer-term consumption expectations, adding to concerns that the global trade war will take a toll on economic growth.

Still, the extreme bearish posturing may be tempered by geopolitical risks, including Ukrainian drone strikes on Russian energy infrastructure and the ongoing conflict in the Middle East. BLOOMBERG