Bullish Oil Bets Surge to Highest Since 2018 Ahead of Airstrike

(Bloomberg) -- As U.S.-Iran tensions intensified in the lead-up to an American airstrike in Baghdad, oil bulls were raising the stakes.

They boosted net-wagers on rising global oil prices to a 15-month high in the week ended Dec. 31 -- the day an Iran-backed militia stormed the American embassy in Iraq. The bets proved prescient as the subsequent U.S. killing of Iran’s top general sent Brent crude futures Friday to the highest settlement since Saudi Arabian facilities were attacked in September.

“By the time you get to next week, we will see increasing bullish positions from today’s attacks,” Rob Haworth, who helps oversee about $150 billion at U.S. Bank Wealth Management in Seattle, said Friday. “Some investors may move to short-covering.”

Further escalation between the U.S. and Iran in the world’s most important oil-producing region could have an enduring impact on the market. In addition to a surge in Brent, volatility rose and the cost of derivatives that insure against price spikes increased.

For a look at how oil options got more bullish after the airstrike, click here

Money managers’ Brent net-long positions, or the difference between bullish and bearish bets, climbed 2% to 410,530 futures and options, the highest since October 2018, according to ICE Futures Europe data released Friday. Long-only wagers rose 2.8%, while shorts increased 7.4%.

The U.S. Commodity Futures Trading Commission postponed its report on West Texas Intermediate crude positioning until Monday because of the New Year holiday.

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, Joe Carroll, Catherine Traywick

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