Investing.com — Hedge funds increased their bearish positions on crude oil last week, with short positions in West Texas Intermediate reaching their highest point in nearly five months as market participants anticipated higher global oil supplies from easing U.S.-Iran tensions.
Money managers added 10,866 gross short positions in WTI futures during the week ended June 16, pushing total bearish bets to 102,895 contracts, according to Commodity Futures Trading Commission data. The figure represents the largest short position since late January, when supply concerns pressured oil markets.
The increase in short bets stems from expectations that a preliminary U.S.-Iran peace agreement could enable higher Iranian oil exports and improve vessel traffic through the Strait of Hormuz. Washington’s decision to grant sanctions waivers on certain Iranian oil sales has strengthened expectations of additional supply entering the market.
Traders are growing concerned that returning Middle Eastern barrels could exceed demand growth, especially as crude imports by China, the world’s largest oil importer, remain weak.
Bearish sentiment spread to refined products. Short-only positions in Nymex diesel increased by 1,854 contracts to 22,214, the highest level since early March, when the regional conflict was beginning.