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Portfolio investors continued heavy buying of crude oil futures and options for a second week after OPEC+ cut its production target more than expected.
Hedge funds and other money managers purchased the equivalent of 47 million barrels of petroleum-related futures and options in the week to October 11.
Purchases came after OPEC+ announced on October 5, 2022 the group would reduce its combined output target by 2 million barrels per day from November 2022.
They followed purchases of 62 million barrels the week before as OPEC+ representatives started to brief traders on the likelihood of a large cut.
The combined position across all six contracts has increased by 109 million barrels in the last two weeks after being cut by a total of 237 million barrels in the 16 weeks since mid-June.
In the most recent week, most buying was concentrated in crude (+36 million barrels) with heavy purchases in NYMEX and ICE WTI (+20 million) and Brent (+16 million).
There was also strong buying of middle distillates (+14 million barrels), including European gas oil (+7 million) and US diesel (+6 million), but sales of US gasoline (-3 million).
Stemming the outflow of hedge fund money and persuading some managers to invest again was likely one of the reasons why OPEC+ cut production targets aggressively.
OPEC+ has been successful in this objective, though at the cost of fierce criticism from the United States of Saudi Arabia, the group’s de facto leader, and key decision-maker. — Reuters.
Online Reporter