Portfolio Investors Shift to Neutral Amid Oil Market Turbulence

Portfolio investors have adopted a neutral stance on petroleum, following significant buying after the OPEC+ meeting in June. Hedge funds purchased 56 million barrels of oil futures over the week ending July 2. This buying spree reversed previous sales and established a broadly neutral position in the market.

Portfolio investors have shifted to a broadly neutral stance in the petroleum market after heavy selling triggered by the OPEC+ meeting in early June abated, with buying activity taking over.

Hedge funds and other money managers acquired the equivalent of 56 million barrels in the six most important futures and options contracts over the seven days ending on July 2. This marks the fourth consecutive week of net buying, totaling 316 million barrels since June 4, according to exchange and regulatory records.

This wave of buying has fully reversed the 194 million barrels sold post-OPEC+ meeting in early June. Consequently, the position now stands at 524 million barrels, in the 40th percentile for all weeks since 2013, showing a broadly neutral to slightly bearish outlook.

(With inputs from agencies.)