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LONDON -(Dow Jones)- Oil market speculators were bullish on Brent crude prices in the week ended March 27, as fears about supply disruptions increased, though analysts said they didn’t expect the bullish bets to hold in the week after.
According to the Intercontinental Exchange Inc.’s (ICE) weekly Commitment of Traders report published Monday, money managers, including hedge funds, raised their net long positions, or bets that prices would rise, in Brent crude futures and options by 8.1% compared with the week before, to 150,883 contracts.
“The further increase suggests that money managers are still betting on a further deterioration of supplies, while some may also hope for a U.S.-led economic recovery,” said David Wech, head of research at JBC Energy. He cited worries about supply in Iran, as well as technical supply issues, such as a gas leak at Total SA‘s (TOT) Elgin platform off Scotland’s coast, and an accident at the Chevron Corp. (CVX)-operated Frade field in Brazil’s offshore Campos Basin, where more than 90% of the country’s crude is produced.
The accident caused an estimated 2,400-3,000 barrels of crude to seep into the Atlantic Ocean from cracks in the seabed.
Brent crude futures gained $1.30 a barrel during the week ended March 27 on reports that Iran had reduced its oil exports, renewing worries about supply disruptions.
James Zhang, a strategist at Standard Bank, said he expects the sentiment to be more bearish next week, as the price of Brent crude oil Wednesday dropped on talks of a strategic stock release and on crude oil inventory builds in the U.S.
Traders in the category raised their long position by 8,846 and cut their short positions by 2,459.
“The higher the net-length and the ratio of long versus short, the bigger is also the threat of a stampede out of the market and a crash of prices,” Wech said. “We see a couple of fundamental factors at place which could eventually trigger such a development.”
In New York, money managers cut their net-long positions by 8.9% in light, sweet crude-oil futures and options, according to data from the Commodity Futures Trading Commission released Friday. The discrepancy between bets on WTI and bets on Brent is a reflection of the widening spread between the two crude oil benchmarks last week, Zhang said.
-By Jenny Gross, Dow Jones Newswires
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