After fund managers reduced their net short positions in Brent crude oil futures for the third consecutive week, the put indicators fell to a seven-month low.
Data from the intercontinental exchange showed that in the week ending last Tuesday, speculators reduced their short contract positions by more than 10,000 lots, bringing it to just above 88,000 lots. Net long positions increased by 15,000 lots, reaching the highest level since the beginning of October.
This warming bullish sentiment coincides with institutional surveys showing that OPEC+ will delay increasing production, which they indeed later did. Additionally, there is optimism about fuel consumption, as the cold winter in Europe is expected to boost diesel and henry hub natural gas demand, while gasoline demand in the usa also appears strong.
"Global fuel inventories are far below seasonal lows over the past five years - ignoring the COVID-19 pandemic period of 2020-2021," said Robert Rennie, head of commodities and carbon research at Westpac Bank. "Low refined oil inventories are bullish for the crude oil product market."