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Hedge funds bet on higher oil prices

Treasury executives are closely rising confidence that oil prices have room to run higher this year on expectations of a strong economic recovery and rising global crude demand.

Last week, the hedge fund raised its best position in the oil complex in more than two and a half months, with net crude oil futures growing their highest in six weeks.

Increased mobility, reopening and stimulus measures all point to strong economic growth and strong demand for oil. Low interest rates and the Fed’s tolerance to leave moderate inflation above 2 percent at times also suggest that investors and speculators would buy more commodities, including oil, to hedge inflation.

Hedge funds were immediately overlooked. COVID crisis in India To the economic recovery in the next few months This prompted them to increase their oil bets for a third straight week in the week of April 27.

During the week, portfolio managers added 30 million barrels of equivalent value to the six most important petroleum futures and options contracts, according to data from the exchange compiled by the Stock Exchange of Thailand. Reuters columnist John KempThis is the biggest weekly rise in oil prices since the beginning of February. Wed

Net crude combined at six-week highs, with WTI raw Lead the rise while speculators maintain almost unchanged positions. Brent rawThis was mainly due to the increased bare short sale, Saxo Bank head of commodities strategy Ole Hansen wrote in commentary In our weekly Commitment of Traders report to April 27

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Overall, commodities are at a ten-year high.The Bloomberg Commodity Spot Index tracks prices of 23 commodities, including oil, spiked on Tuesday. Highest since 2011The index has rallied more than 70% since hitting a four-year low in March 2020.

Even when talking about supercycle in oil Has decreased In recent weeks, major investment banks such as Goldman Sachs have remained largely volatile on oil and commodities overall, anticipating strong economic growth and easy monetary policy to help. Demand for oil has grown the most. Goldman sees the price of oil Tap $ 80 a barrel. This summer, and all commodities are expected to increase by 13.5 percent over the next six months.

The opening of the new economy and increased travel this summer will boost global demand for major fuels, including gasoline, diesel and Even jet fuel, Which showed that the recovery was the slowest so far.

“For the first time in my life I think traffic jams are beautiful,” said Jim Teague, Director and Co-Chief Executive Officer of Enterprise Products Partners. say In the Q1 earnings call earlier this week.

“Although the economic recovery is uneven But when you look at the world’s largest economy, demand is rising, and all indications are that even Europe is not catching up, ”he added.

The optimism that demand will recover strongly appears to be shared by hedge fund managers, who have shown good bets over the past few weeks that oil consumption will rise despite the fact that oil consumption will rise. There were setbacks in large developing countries such as India and Brazil.

Inflation forecasts are also likely to attract more buyers to oil contracts as investors are ready to make more purchases to hedge inflation risk in their portfolios.

“As inflation continues below this long-term target, the Commission will set a goal of achieving moderate inflation above 2 percent for a period of time so that the average inflation rate is 2 percent over time and LongerReally?Inflation forecasts for this term remain held at 2 percent. ”Fed say In a statement by the Federal Open Market Committee (FOMC) last week.

The recovery of uneven oil demand in different countries But most, including the United States, China and Europe right now, are showing signs that they are in the midst of a significant turnaround this year, raising confidence among finance managers that oil prices remain roomy. It will increase in excess of $ 70 a barrel.

By Tsvetana Paraskova for Oilprice.com

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