Hedge funds boosted bullish wagers on US crude oil to the highest level in one month, data showed on Friday, as prices hit a five-month peak on expectations that a persistent glut would fade and the dollar weakened. The speculator group raised its combined futures and options position in two major NYMEX and ICE markets by 48,946 contracts to 229,932, its highest level since August 22, in the week to September 19, US Commodity Futures Trading Commission (CFTC) data showed.
Short positions among the producer group, often an indication of hedging by oil drillers, climbed to a two-month high. US oil futures on the New York Mercantile Exchange jumped by about 2.6 percent during the trading days ended September 19. Early this month, the US dollar fell to its lowest level since the start of 2015 versus a basket of currencies, making oil cheaper for holders of other currencies.
The IEA (International Energy Agency) revised higher its 2017 global oil demand growth forecast and said a global oil glut was shrinking thanks to strong European and US demand, as well as production declines in Opec and non-Opec countries. The Organization of the Petroleum Exporting Countries last week forecast higher demand for its oil in 2018 and pointed to signs of a tighter global market, indicating its production-cutting deal with non-member countries is helping to tackle a supply glut.
Oil prices also got a boost as data showed Saudi crude exports fell to 6.693 million barrels per day (bpd) in July, down from 6.889 million bpd in June. However, rising shale oil output limited gains. US shale production is set to rise for a 10th straight month in October, the US government said this week. Output across seven shale plays is forecast to rise by nearly 79,000 bpd to 6.1 million bpd, according to the US Energy Information Administration's monthly drilling productivity report.
Among refined products, speculators hiked their net long futures and options positions in US gasoline to the highest level in nearly three and a half years. The hike came as refiners began restarting activities after Hurricane Harvey pummeled Texas, the heart of the US oil and gas industry. Bullish wagers on ultra-low sulfur diesel surged to the highest level in more than four years, the data showed.