(Bloomberg) — Hedge funds boosted bullish wagers on US oil at the fastest pace since March as supply disruptions from Iran to the Red and Black Seas are set to once again boost demand for American crude.
Money managers increased their net-long positions on West Texas Intermediate crude by 21,402 lots to 108,307 in the week ended July 28, the biggest jump in about four months, weekly CFTC data on futures and options show. Speculators now hold the most bullish stance on US oil since mid-June.
The hike in bullish bets was driven not only by the Iran war, but also by renewed attacks from Iran-backed Houthi militants on Saudi crude shipments through the Red Sea. The route has become an increasingly important alternative for the kingdom’s exports as disruptions in the Strait of Hormuz persist.
Fresh attacks on tankers loading crude at the Caspian Pipeline Consortium terminal on Russia’s Black Sea coast, which exports most of Kazakhstan’s oil, have compounded supply worries.
Those risks are likely to intensify the draw on US barrels from overseas. US crude exports remain elevated by historical standards, with traders expecting shipments to climb again as foreign buyers seek to replace disrupted global supplies.
Speculators left their bullish position on Brent crude largely steady. Net-long positions eased by 6,948 to 185,083, according to ICE Futures Europe data on futures and options.
Fuel markets also continued to flash signs of tightness, spurring bullish wagers. Net-long positions on US gasoline rose to the highest in more than four months, while long-only bets on US diesel were at the highest in nearly five months.
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