It May Take More Than a Tanker Attack to Quell Oil Short-Selling
It May Take More Than a Tanker Attack to Quell Oil Short-Selling
(Bloomberg) -- Oil short-selling has more than doubled in three weeks, with attacks on oil facilities and tankers unable to push prices higher for very long.
Hedge fund bets on a West Texas Intermediate crude rout jumped 47% in the week ended Oct. 8, following surges of more than 30% in the previous two, data released Friday show.
Futures in New York erased early gains on Friday following missile strikes on an Iranian tanker in the Red Sea, before climbing once again ahead of a partial trade deal between the U.S. and China. Oil closed 2.2% higher at $54.70 a barrel. Crude has retraced all the gains made since the attack on Saudi Arabia’s giant Abqaiq oil-processing complex in mid-September.
“Investors are more worried about the global market and the poor outlook on demand,” said Stewart Glickman, an energy analyst at CFRA Research Inc. “I don’t think that one attack on a tanker in the Red Sea is enough to turn the tide.”
Aside from a few short-lived spikes, WTI has been stuck in the $50s since June as the U.S. keeps producing crude at a record pace. Meanwhile, the International Energy Agency on Friday trimmed forecasts for global oil demand growth this year and the next by 100,000 barrels a day.
The WTI net-bullish position -- the difference between wagers on a rally and bets on a rout -- shrank 30% to 94,875 futures and options, the U.S. Commodity Futures Trading Commission said. Long bets fell 3%. Shorts have surged 167% since mid-September.
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To contact the reporters on this story: Carlos Caminada in Calgary at ccaminada1@bloomberg.net;Sheela Tobben in New York at vtobben@bloomberg.net
To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net;David Marino at dmarino4@bloomberg.net
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