After a prolonged exile, oil is staging a modest return to hedge fund favor. Vanguard’s latest figures reveal a 21-million-barrel acquisition across key contracts—the first in seven weeks—following a dramatic 304-million-barrel divestment since April. Yet, this isn’t a full-throated endorsement; 16 million barrels merely covered bearish shorts, indicating wariness over optimism.
Even post-adjustment, their 402-million-barrel position ranks at the 19th percentile since 2013, suggesting lingering doubts despite OPEC+’s production restraint signals.
Curiously, funds are migrating from Brent to WTI crude, perhaps foreseeing a squeeze at Cushing, Oklahoma, where inventories sit 25% below the decade’s norm.
Simultaneously, they’re wagering heavily on U.S. gas, snapping up 316 billion cubic feet last week, anticipating that strong demand will erase excess stocks.
Ultimately, this is a part of an ongoing trend where fund managers have grown progressively bullish about their perspective on th gas prices in the united States. Many are expecting a rise in demand, which will then help eliminate any excess existing inventories.
Many estimate that consumption and experts will balance sooner rather than later after seeing huge surpluses last year and earlier this year.
Not to mention, if the production does decline as a result of February’s drilling cuts, inherited inventories will deplete over the next 12 months.