Hedge funds slashed their bets on falling oil prices, leaving them the most bullish in two months as Opec called for a return to $80 crude.
Money managers’ net-long position in West Texas Intermediate rose by 14,821 contracts to 147,678 futures and options in the week ended September 15, according to data from the Commodity Futures Trading Commission.
In contrast, traders curbed their bullish positions in European benchmark Brent by the most in a month. The Organization of Petroleum Exporting Countries assumes crude prices will rise to $80 by 2020 as output falls elsewhere. US production could sink by the most in 27 years in 2016 as the price rout extends a slump in drilling.
“The market’s not as oversupplied as we think it is,” said David Pursell, MD at investment bank Tudor Pickering Holt & Co in Houston. “The news out of Opec is more bullish, US production is falling and demand is great right now.”
Opec expects crude prices to rise by about $5 a year through 2020. Production from nations outside the group will be 58.2m barrels a day in 2017, 1m lower than previously forecast. US output could sink by 400,000 barrels a day next year after a prolonged period of low prices forced producers to idle half the rigs seeking oil.
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