Specs place first bullish Brent bets in 4 weeks, LSG length outstrips crude

London (Quantum Commodity Intelligence) - Funds continued to favour distillates futures last week in Europe, with another surge in bullish bets in the low sulfur gasoil (LSG) contract on the ICE exchange.

The net length gain outstripped those seen in Brent or WTI, despite last week seeing the first net long gain in Brent since early May, exchange data shows.

Fund managers increased net-length in LSG futures and options by 17,053 lots over the week to June 1 through increasing long positions 16,500 lots and cutting shots by 500.

That left the share of open interest held by long positions at 14.7%, up from 13.4% a week earlier and comes amid sustained high vaccination rates in Europe. 

That rise contrasts with a cut in the net-length of heating oil positions - the similar US contract - held by money managers by 2,258 lots, according to data by CME.

The percentage of open interest is 16.5%, down on the week, but still relatively higher.

Funds were bullish crude, particularly in the US, and added twice as many net-long positions in WTI futures and options than in Brent, up around 16,400 lots compared to 8,800 for the latter.

However, the gain in speculative net-length in Brent was the first since May 4 and came as talks stalled to bring Iran back into the international fold, which could have led to an increase in crude supply.

Funds held 10 times more long positions than short in WTI, and only 3.5 times more long bets than short in Brent.

Meanwhile, funds turned slightly more bearish about RBOB futures, cutting net length by 950 lots after adding another 1,425 shorts to their tally.

Speculative net-length in RBOB futures has fallen by 10,000 lots since May 4.