In the week ending 10 June, crude oil futures (Brent and WTI) were on a bullish trajectory, breaking above previously rangebound trading levels. Money managers increased their length for the sixth consecutive week, with long positions rising by 24.8mb (+5%). Since the week ending 29 April, longs have risen by 30%. Meanwhile, sales of short positions accelerated, falling by 19.0mb (-9%). As a result, the long:short ratio was supported from 2.46:1.00 to 2.85:1.00, the highest level since April, sitting at the 27th percentile for all weeks since 2013. Physical players were largely risk-on over the week, with long and short producer/merchant positions rising by 6% and 7%, respectively.
Constructive trade talks between the US and China in London last week boosted the bullish sentiment in risk assets, including oil, with President Trump relatively sanguine about the outcome. Market participants were optimistic about lowering tariff rates between the two countries, fostering greater economic growth and oil consumption. Given the relatively bearish historical positioning by speculative players, the market was vulnerable to an upwards spike in the event of a bullish catalyst, which materialised as the Israel-Iran conflict escalated. However, these positioning changes will only be reflected in the data for the week ending 17 June.
