Funds lukewarm about bullish crude forecasts, data from CFTC shows

Quantum Commodity Intelligence - Funds continued to show a lack of interest in oil futures last week despite the increasingly tight prompt global fundamentals, the Commitment of Traders Report (CFTC) showed.

Speculative net-length fell sharply in WTI on Nymex and marginally in Brent futures and options on ICE over the week to June 29, despite several analysts expecting both Brent and WTI to surge past $80/b this summer.

Funds liquidated 13,510 long lots and added 691 short lots in WTI futures and options to reduce net-length by 14,201 lots over the week to 407,556 - a four week low.

The transfer between long and short was more even in Brent, with funds adding 3,356 longs and cutting 4,687 shorts to leave the net length down 1,331 lots at 308,401 - a three week low.

Funds' length in Brent hit a year high of 419,482 lots by June 29, but the volume was only around 4,000 lots higher than seen in February.

Brent and WTI prices continued to rally over the period and backwardation widened in the nearby curves, over the week to last Tuesday - ahead of the OPEC+ meeting which started on July 1.  

Meanwhile, funds continued to see upside in European distillates, adding another 2,263 long lots in Low Sulfur Gasoil (LSG) futures and options on ICE over the week, and only 1,327 shorts - taking the net length to 153,000 a marginal rise on the week.

Funds had added 44,089 long lots in LSG since March 16 compared to 7,004 long lots in Brent and just 958 lots in WTI.

There was also a further revival in US gasoline, with funds adding 7,471 long lots and only 135 short lots in RBOB futures amid the US driving season.

But funds held more bullish bets in RBOB before the summer, indicating an erosion of bullish sentiment.

Funds held 92,497 long lots on RBOB futures and options on March 16, compared to 82,132 on June 29.