September 24, 2018 / 11:13 AM / 3 months ago

COLUMN-Hedge funds bet on shortage of Brent oil: Kemp

(John Kemp is a Reuters market analyst. The views expressed are his own)

* Chartbook: tmsnrt.rs/2xBIs4T

By John Kemp

LONDON, Sept 24 (Reuters) - Hedge fund managers made only minor adjustments to their overall position in petroleum futures and options in the latest week but continued their rotation out of West Texas Intermediate into Brent.

Hedge funds and other money managers raised their combined net long position in the six most important petroleum contracts by just 3 million barrels to 1.049 billion barrels.

Fund managers boosted their net position in Brent (+28 million barrels) and U.S. gasoline (+4 million) but cut positions in U.S. heating oil (-4 million), European gasoil (-9 million) and WTI (-16 million barrels).

Diverging attitudes towards Brent and WTI have become the most notable short-term trend among hedge funds (tmsnrt.rs/2xBIs4T).

Portfolio managers have boosted their net position in Brent by 143 million barrels in the last four weeks, an increase of 44 percent, including by 51 million barrels in the two most recent weeks.

At the same time, fund managers have trimmed their net position in NYMEX and ICE WTI by 44 million barrels in the last fortnight.

Hedge funds hold nearly 16 bullish long positions in Brent for every bearish short one, up from a ratio of 6:1 at the end of May, and far ahead of the ratio of 9:1 in WTI.

Fund managers are betting the introduction of sanctions on Iran will result in a shortage of seaborne crude on international markets even while the landlocked U.S. inland market remains plentifully supplied.

Related columns:

- Hedge funds stay bullish on Brent while trimming WTI (Reuters, Sept. 17)

- Traders bet Iran sanctions will leave market short of crude (Reuters, Sept. 11)

- Hedge funds turn bullish again on oil (Reuters, Sept. 10) (Editing by Dale Hudson)

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