2014.10.2005:45:46UTC+00Hedge funds reduce bullish crude positions on price fall

Plummeting prices have pushed money managers to cut their bullish bets by the largest amount in six weeks, indicating the loss of confidence that producers will result to reducing supplies.

The number of net long positions for the American West Texas Intermediate benchmark was 8.1% fewer during the week that ended on October 14th, while short positions surged to a 22 month high, based on data from the US Commodity Futures Trading Commission. Net long bets fell to 176,671 options and futures, the lowest since September 2nd, while shorts rose to 86,650.

WTI has declined by 9.2% so far this month behind the rise of production in the US to the highest in 29 years, adding to the outlook of a global glut amidst the International Energy Agency’s (IEA) reduction in its projection for the growth of demand. Crude oil has now entered a bear market with members of the Organization of Petroleum Exporting Countries believed to be prioritizing market share over prices.

The IEA says that consumption of crude oil around the world will grow by only 650,000 barrels per day in 2014, the slowest since 2009 and 250,000 less than the previous forecast it made in September. Demand growth for 2015 was revised down as well by 100,000 barrels to 1.1 million in total.

Output of crude oil in the US hit 8.95 million barrels per day during the week of October 10th, the highest since June 1985. Production is seen by the Energy Information Administration to climb further next year to 9.5 million daily.