Hedge Funds Bet On Higher Oil Prices
Tsvetana Paraskova, 05 May 2021
Money managers intimate a growing confidence that oil prices have room to run higher this year, thanks to expectations of a robust economic rebound and rising global demand for crude.
Last week, hedge funds added the most bullish positions in the oil complex in more than two and a half months, with the net long in crude oil futures jumping to the highest in six weeks.
Rising mobility, the reopening of the economies, and the stimulus packages all point to strong economic growth and consequently, strong oil demand growth. The low-interest rates and the tolerance of the Fed to let inflation run at a moderately above-2-percent level for some time also suggest that investors and speculators will buy more commodities, including oil, as a hedge against inflation.
Hedge funds are looking beyond the immediate COVID crisis in India toward economic recovery in the coming months. This has prompted them to add bullish bets on oil for a third consecutive week in the week to April 27.
