Speculators hike net-long positions in Brent

Money managers and hedge funds have boosted their net-long positions on ICE Brent futures over the past week, reaching more than 265,000 lots as of September 8. Gross-long positions in Brent futures increased by 91 lots during this period, according to data from ICE Futures Europe. The rise in net-long bets occurred despite fading hopes of a diplomatic breakthrough between the United States and Iran, which has kept commercial navigation through the Strait of Hormuz challenging.

The surge in net-long positions was primarily driven by speculators covering their short positions, as opposed to new long buying, according to insights from two analysts at ING Bank. Brent crude prices have surpassed the $105 per barrel mark due to persistent attacks on vital energy infrastructure and dwindling optimism surrounding a potential US-Iran diplomatic resolution.

ING Bank's analysts noted that this data indicates market participants are cautious about taking on excessive risk amid heightened market uncertainty. When speculators increase their net-long positions, oil prices typically rise, while a decrease in these positions generally leads to declining prices. Consequently, speculators' actions can exert influence over oil prices and market dynamics.