Money managers and hedge funds have increased their net-long bets on ICE Brent futures in the week to 8 September.
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Speculators bought over 4,000 lots as of 8 September, increasing net-long positions in Brent futures to more than 265,000 lots.
Gross-long positions in Brent futures increased by 91 lots during the week, according to futures and options data from ICE Futures Europe.
The increase in net-long bets comes as hopes of a diplomatic breakthrough between Washington and Tehran dwindle, keeping commercial navigation through the Strait of Hormuz choked.
The surge was driven “almost entirely by short covering,” rather than fresh long buying, two analysts from ING Bank noted.
Brent crude’s price has topped $105/bbl mark amid relentless attacks on critical energy infrastructure and fading hopes of a US-Iran diplomatic breakthrough.
The latest data “reflects market participants’ reluctance to take on too much risk amid market uncertainty,” ING Bank’s analysts added.
When speculators boost net-long positions, prices typically rise. Conversely, when they reduce these positions, oil prices tend to decline, leading to a cycle where their actions can influence oil prices and the market.
By Aparupa Mazumder
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