Hedge Funds bolstered their bullish bets on West Texas Intermediate oil to a record as increasing flows of domestic crude to Gulf Coast refineries trim down demand for more expensive foreign grades.
Money managers increased net-long positions, or wagers on surging financial values, on the U.S. benchmark by 2.2 percent in the week ended February 25, Commodity Futures Trading Commission information revealed. The positions spiked up to the topmost mark in CFTC data going back to 2006.
Shipments to the Gulf from Cushing, Oklahoma, which is the delivery point for New York futures, started to hike in January, when TransCanada Corp. began moving oil on the southern leg of the Keystone XL pipeline. The extra supplies supported narrow the premium of Brent crude the international benchmark, over WTI to a 21-week closing low of $6.48 a barrel on February 28 from a 2014 high of $14.88 on January 13.
“The completion of the pipeline is clearly having an impact,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “The rise in speculative length and the narrowing of the Brent spread are a product of the Cushing supply drops, which should continue.”
Crude relinquished 60 cents, or 0.6 percent, to $101.83 a barrel on the New York Mercantile Exchange in the report week. Financial values hike 19 cents to $102.59 on February 28. WTI has bolstered 4.2 percent this year.
Cushing Supplies
Futures started the reporting period by surging 0.9 percent to $103.31 on February 19, the topmost settlement since October 8, on speculation that an Energy Information Administration report the next day would show that Cushing stockpiles decrease.
Oil backslide 0.4 percent to $102.92 on February 20 after the EIA said nationwide U.S. crude inventories increased in the week ended February 14 as gasoline use retreated. Crude supplies rallied 973,000 barrels to 362.3 million, the peak position since December 20. Cushing supplies decreased 1.73 million barrels to 35.9 million, the weakest since October. Gasoline demand sagged down for a third week, down 3.5 percent to 8.03 million barrels a day.
Crude plummeted 0.7 percent to $102.20 on February 21 amid speculation prices soared more than justified as the heating season nears its end. WTI skyrocketed 10 percent in the six weeks ended on February 21. It’s the longest run of hikes in a year.
Bolstering Shares
Futures boosted 0.6 percent to $102.82 a barrel on February 24 as the Standard & Poor’s 500 index rallied, achieving an intraday record. Equities spiked up as investors estimated that the U.S. economy can withstand a slowdown of the Federal Reserve’s bond-purchasing program.
WTI relinquished 1 percent to $101.83 on February 25, the largest decrease in three weeks, on projections that a report the next day would display that U.S. supplies bolster and on concern that the declining Chinese yuan will hurt growth in the second-largest oil-consuming country. The Chinese currency slumped for a sixth day, finishing under the central bank’s reference rate for the first time since September 2012.
Futures rallied 0.7 percent to $102.59 on February 26 after the EIA said Cushing supplies relinquished 1.08 million barrels to 34.8 million in the week ended February 21. It was the fourth-straight decline and left stockpiles at the worst mark since October.
Net-long positions in WTI crude hike by 7,195 futures and options mixed to 339,052. Long positions gained by 8,467 to a record 360,868, while shorts jumped by 1,272 to 21,816.
