Fund managers sold petroleum last week at the fastest rate since successful coronavirus vaccines were announced in November, as a resurgence of infections and a loss of upward price momentum triggered profittaking.
Hedge funds and other money managers sold the equivalent of 88 million barrels of petroleum futures and options in the week to March 23, the fastest rate of selling since Nov. 3, according to exchange and regulatory data.
The heaviest selling was concentrated in Brent 51 million barrels but there were also sales in NYMEX and ICE WTI 21 million, U.S. gasoline 4 million, U.S. diesel 5 million and European gasoil 8 million.
Most of the sales were driven by the liquidation of existing bullish long positions which were reduced by 73 million barrels rather than the creation of new bearish short ones just 16 million barrels of shorts were added.
Prior to the selloff, portfolio managers positions had become lopsided, with a net position of 913 million barrels, which was in the 83rd percentile for all weeks since 2013.
Long positions outnumbered short positions by a ratio of 5.51, in the 75th percentile for all weeks since 2013
Since at least the start of 2015, similar lopsided positions have normally preceded a sharp reversal in the previous price trend.
With so many funds having already placed a bullish bet on the direction of oil prices, and few short positions left to be covered, the market had become vulnerable to any setback.
In fact, flat prices and…