Hedge funds have raised their oil gauge as their mood has become more optimistic about the prospect of a price hike and the possibility of a US-China deal. This also raises hopes that the global economy will nevertheless avoid a recession in 2019/20.
From a fundamental point of view, hedge funds are starting to build long positions in WTI and BRENT after slightly better overall economic data. At this stage, they are still showing some improvement, but nothing extremely optimistic.
From a positioning standpoint, funds are expecting many short-range players from September and October to begin closing their positions at a time of rising prices.
Smart Money believes the September and October sales are over and are showing signs of being ready for brand new purchases.
Overall, fund managers, in conjunction with other market players, have built up long positions at this stage of 56 million barrels across the oil sector, expecting prices to continue rising.
Trader Martin Nikolov