Hedge funds pile into bullish bets on crude oil by most on record

Despite the Saudi energy minister dashing hopes for a production freeze, hedge funds and other speculators raised bullish bets on US crude oil. PDC Energy photo.

Hedge funds bet on OPEC, non-OPEC production freeze

NEW YORK, Aug 26 (Reuters) – Hedge funds and other speculators raised their bullish bets on U.S. crude oil in the past week by the most on record fuelled by speculation that Organization of the Petroleum Exporting Countries will agree next month to a production freeze deal with non-OPEC members.

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Money managers, including hedge funds, raised their net long U.S. crude futures and options positions in the week to Aug. 23 for the third consecutive week to the highest since early June, data from the U.S. Commodity Futures Trading Commission (CFTC) showed on Friday.

The speculator group raised its combined futures and options position in New York and London by a massive 88,924 contracts to 241,196 during the period, the biggest increase on record dating back to 2006.

U.S. crude futures rose about 3.0 percent in a choppy week to Aug. 23, as investors weighed burgeoning Chinese fuel exports, more Iraqi and Nigerian crude shipments and a rising U.S. oil rig count against the possibility of a production freeze deal by major producers.

Gross short positions among speculators in U.S. crude fell by a massive 66,247 contracts to 96,985, the lowest in two months, in a sign that much of the rally over the last few days have been driven by short covering.

Since then, Saudi has dashed hopes of a deal, when Energy Minister Khalid Al-Falih told Reuters that “we don’t believe any significant intervention in the market is necessary.”

OPEC members will meet on the sidelines of the International Energy Forum, which groups producers and consumers, in Algeria from Sept. 26-28.

The U.S. gasoline markets have also come into the limelight in recent days as a glut in refined products threatens to dent demand for crude. However, CFTC data showed speculators turned bullish on gasoline, with a combined futures and options net long position of 15,079 contracts in the week to Aug. 23.

On Friday, oil prices settled marginally higher after a choppy session as traders reacted to comments from Fed Chair Janet Yellen and reports of missile activity in Saudi Arabia.

(Reporting by Devika Krishna Kumar in New York; Editing by James Dalgleish)