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Speculators ramped up their bullish bets on higher oil prices after OPEC+ jolted markets with a surprise production cut, posting the second-largest increase in net-wagers on record last week.
Net-long positions in Brent crude jumped by more than 73,000 contracts in the week to April 4, according to data from ICE Futures Europe. The only other time a bigger net-inflow occurred was in late-2016, which also followed unexpected output curbs from OPEC that ultimately led to the creation of OPEC+.
“We expect bullish capital flows to continue for the time being as the production cuts will drive storage draws,” Macquarie Group analysts including Vikas Dwivedi wrote in a note.
Brent surged as much as 8% after OPEC+ announced the round of output curbs of almost 1.7 million barrels a day, but prices struggled for further direction after the initial move last week. Futures were trading near $85 a barrel on Tuesday.
The jump in net-wagers was driven by a mix of fresh bullish bets and a drop in bearish ones. Outright long positions climbed the most since 2019, while short bets fell the most since 2020, combining to make a large net-change.
The ICE figures followed similar data from the Commodity Futures Trading Commission, which showed net-bullish bets in West Texas Intermediate jumped the most since 2020 last week. The number of speculative traders holding short bets for WTI and Brent also dropped the most since 2020.
