Article / 16 February 2015 at 13:04 GMT

Brent crude bullish bets jump but mainly on short-covering

Head of Commodity Strategy / Saxo Bank
By Ole Hansen

Hedge funds increased bullish bets on Brent crude by 13% to 158,974 lots during the week of February 10. The increase, however, was primarily driven by a major reduction in short positions as longs were also scaled back.

Speculative position in Brent Crude and Gas Oil
Despite a 2.6% price drop during the week the increase in net-longs was driven by a major reduction in speculative short positions following the return of positive momentum at the beginning of the month. However the fact that longs were scaled back pointed towards some hesitancy in extending a gross long which is already close to record territory. 

Brent Crude Speculative position

The strong rally in (ICE) gas oil and (NYMEX) RBOB Gasoline at the beginning of the month helped reduce some of the negative sentiment across the sector. The continued rally last week triggered a 26% increase in the net-long but just like Brent crude the increase was primarily triggered by short covering as the above table shows. 

Gas oil Speculative positioning
– Edited by Clare MacCarthy

Ole Hansen is head of commodity strategy at Saxo Bank – the home of social trading


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