Bullish sentiment in oil markets surged to a four-month high in the week ending Dec 24, with money managers increasing net-long positions on West Texas Intermediate (WTI) crude by 21,694 lots to 182,895 lots, according to the Commodity Futures Trading Commission.

Despite WTI trading within a narrow US$3 range that week, the rise in bullish bets reflects longer-term positioning rather than immediate price movements. Hedge funds have been ramping up their bets on rising oil prices, signalling optimism for 2025, even as concerns about a potential supply glut and subdued Chinese demand persist.

Market focus is shifting towards geopolitical uncertainties, including Donald Trump's return to the White House and ongoing conflicts in Ukraine and the Middle East. The US president's stance on Iran, a key oil exporter, adds further unpredictability to the market.

Algorithmic traders have also turned net-long on both WTI and Brent crude, extending their positions earlier in December, as highlighted by Bridgeton Research.

As 2024 closes, investors are preparing for a potentially volatile oil market in the coming year, balancing upside risks against lingering supply and demand challenges.

Bloomberg