Big speculators closed out nearly $6 billion worth of bullish bets in US crude oil markets in the week to July 15, according to regulatory data that confirmed the biggest four-week fund exodus on record.
Money managers slashed their net long US crude futures and options positions on New York and London exchanges by 56,323 contracts to 294,735 during the period. That one-week decline, equivalent to 56 million barrels of oil, was the second-largest since the Commodity Futures Trading Commission (CFTC) began reporting the data in 2009.
The figures confirm the breathtaking exodus of speculative money that rattled oil markets late last week and early this one, as hedge funds capitulated to growing signs of a surplus of immediately available oil - despite previous bets on deepening geopolitical woes in the Middle East and North Africa.
Net long positions had reached a record of nearly 400,000 lots in mid-June, as prices pushed to a 9-month high when militant fighters led by the Islamic State in the Levant seized wide swathes of Iraq in lightning advances.
Prices have dropped swiftly since then as exports from Libya improved and the militants in Iraq appeared to pose little threat to southern oil exports.
The retreat accelerated late last week and early this one, the period captured in the CFTC data.
Bullish bets have now fallen by more than 100,000 lots – or 100 million barrels, worth about $10 billion – over the past four weeks, the largest exodus on record.
The data confirm anecdotal reports of a dramatic fund exodus from oil markets over much of the past week, until new sanctions on Russia and the Ukraine plane crash revived geopolitical concerns and pumped up global crude oil prices, which jumped by nearly 2 per cent.
Oil prices ended the week higher for the first time in a month, despite a decline.
“We have to keep in mind that up until two days ago there was a big exodus of speculative length. Once that drives the market, the market often goes back in the opposite direction,” said Gene McGillian, an analyst with Tradition Energy in Stamford, Connecticut.