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Oil Investors Learn `Don't Fight the Saudis' as Rally Bets Climb

Oil Investors Learn `Don't Fight the Saudis' as Rally Bets Climb

(Bloomberg) -- Hedge funds appear to have an unwavering confidence in Saudi Arabia.

They boosted bets on U.S. oil’s rally by a whopping 35 percent in the week ended March 19, the most in more than two years, as the kingdom drummed up support for supply cuts in an OPEC meeting with allies. Just two days later, West Texas Intermediate crude hit $60 a barrel for the first time since November.

“In the bond market they say don’t fight the Fed and I think in the oil market the motto is don’t fight the Saudis,” said John Kilduff, partner at Again Capital LLC, a New York hedge fund focused on energy. “Hedge funds are siding with them and banking on them to deliver on withholding supplies to the U.S. in particular, but also on a global basis.”

Oil Investors Learn `Don't Fight the Saudis' as Rally Bets Climb

Hedge funds’ WTI net-long position -- the difference between bets on higher prices and wagers on a drop -- climbed to 212,317 futures and options, the highest since October, according to U.S. Commodity Futures Trading Commission data released Friday. Longs increased nearly 20 percent, while shorts slid 19 percent.

Other positions:
  • Money managers increased their bets on Brent crude by 15,934 net-long positions to 308,606, also the highest since October, according to ICE Futures Europe data.
  • Net-long positions on benchmark U.S. gasoline rose by 15 percent, while those on diesel decreased 56 percent, according to the CFTC.

To contact the reporters on this story: Jessica Summers in New York at jsummers24@bloomberg.net;Ben Foldy in New York at bfoldy@bloomberg.net

To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Carlos Caminada, Catherine Traywick

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