Hedge- fund managers and other large speculators increased last week for the first time since January, according to the U.S. Commodity Futures Trading Commission.
Long positions, or bets that prices will rise, outnumbered shorts by 68,436 in the week ended Feb. 16, according to the commission’s Commitments of Traders report Feb. 19. That’s a 63 percent increase from the week before and the first increase in five weeks. Speculators also added to their long positions for gasoline and heating oil.
“Index funds, ETFs and other types of managed money accounts were buying, but they covered more shorts than they bought new longs, which gives the overall flavor a bit of a bearish taste,” said Peter Beutel, president of trading adviser Cameron Hanover Inc. in New Canaan, Connecticut. “Producers were selling.”
Overall open interest fell 5,978 contracts to 1.30 million during the period, according to the CFTC report.
The bets that oil prices would increase had dropped 69 percent in the four weeks through Feb. 9. Speculative long positions have outnumbered short positions since May.
Oil for March delivery rose $3.26, or 4.4 percent, to $77.01 a barrel on the New York Mercantile Exchange in the week ended Feb. 16.
Who’s Buying
“The ones buying new longs were certainly those people responding on the days when the dollar was weak or equities were higher or there was fresh economic news that favored a recovery,” Beutel said. A weakening dollar boosts demand for commodities as an alternative investment, and advancing equities are seen as a sign of a strengthening economy.
Long positions on gasoline also increased for the first time in five weeks. They outnumbered shorts by 58,036, an increase of 4,600, or 8.6 percent, from the week ended Feb. 9. They had dropped 30 percent in the previous four weeks to the lowest this year. Gasoline long positions have outnumbered shorts since the launch of the RBOB contract in 2006.
Long positions on heating oil outnumbered shorts by 16,184. The gain of 1,426, or 9.7 percent, snapped a five-week decline to 14,758, the lowest level since March 20.
Hedge-fund managers and other speculators increased their net-short positions in natural gas for the first time in four weeks. Shorts outnumbered longs by 154,292, up 2.3 percent from 150,827 the previous week. Shorts have outnumbered longs since March 2007.
Analysts and investors follow changes in speculators’ positions because such transactions can reflect an expectation of a change in prices.
Source: http://www.bloomberg.com/apps/news?pid=20601103&sid=a5afqRAiJhwA
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