Hedge Fund Managers Say Saudi Arabia, Its Allies Cannot Replace Iranian Oil

Hedge Fund Managers Say Saudi Arabia, Its Allies Cannot Replace Iranian Oil

Hedge funds and other money managers increased their combined net long position in the six major petroleum contracts by another 50 million barrels in the week to Sept. 25.
Portfolio managers have raised their combined net long position by a total of 196 million barrels over the last five weeks, according to exchange and regulatory data, Reuters reported.
Bullish long positions now outnumber bearish short ones by a ratio of more than 12:1, and the imbalance is rapidly closing in on the record 14:1 back in April.
But the new wave of hedge fund bullishness is concentrated almost entirely in Brent rather than WTI or refined fuels.
Fund managers have raised their net in Brent by 172 million barrels since Aug. 21 compared with an increase of just 5 million in WTI.
Fund managers now hold a net long position of almost 500 million barrels in Brent betting prices will increase even further from their current four-year high.
Hedge fund long positions outnumber short ones in Brent by more than 19:1, up from a ratio of just 8:1 at the start of August, and closing in on the record 21:1 set in April.
Traders foresee a shortage of seaborne crudes linked to Brent as US sanctions on Iran go into effect on Nov. 4, despite reassurances from Saudi Arabia, Russia and the United States supplies will remain adequate.
Concern about feedstock shortages linked to sanctions explains why position-building has been overwhelmingly concentrated in Brent rather than WTI or refined fuels.
The inland US crude market remains well-supplied and refined fuel markets appear balanced as an international freight slowdown and higher prices take their toll on consumption.