Hedge funds halted purchases of oil contracts

Shortly before the new year started, the oil price growth stalled due to growing cautiousness of investors after two weeks of active oil contracts buying.

In a week that finished on January 3, a significant amount of 12 million barrels in oil futures and options was sold. Hedge funds and other types of money managers were the sellers.

As it was shown in reports made by ICE Futures Europe and the U.S. Commodity Futures Trading Commission, the selloff started after the funds purchased 103 million barrels in the previous two weeks.

Over the last week, the sales of WTI (-30 million barrels) and U.S. diesel (-2 million) offset the purchases of Brent (+18 million barrels), European gas oil (+3 million) and U.S. gasoline (+1 million).

There’s more and more optimism among investors regarding the outlook for middle distillates (diesel and gas, for example) due to low inventories, while they are less optimistic about crude contracts.

Bullish long positions in middle distillates exceed bearish short ones, with a margin of 3.86:1. At the same time, the same difference in crude oil is 3.06:1.