Large hedge funds are puzzling over further OPEC moves. Energy investors assume that the cartel and non-OPEC oil exporters participating in the OPEC+ deal will be able to make up for losses in case the global economy slips into a recession again.
Meanwhile, hedge funds are reducing their investments in crude and petroleum products. Investors are alarmed by growing uncertainty due to the second COVID-19 wave and a greater likelihood of a new recession.
Hedge fund managers reckon that OPEC and its allies will postpone their decision to increase oil production for the nearest three months. Originally, they had agreed to scale up oil output starting from January 2021.
In the week of October 7-13, hedge funds and other trustees bought an equivalent of 31 million barrels in oil-related futures and option contracts. At the same time, portfolio managers opened long positions to buy 12 million barrels of crude and short positions to sell 43 million barrels.
Experts say that such investment solutions enabled both buyers and sellers to minimize their risks. To sum up, hedge funds purchased 38 million barrels of the Brent international benchmark grade and 5 million barrels of petroleum fuel oil distillates. Besides, large oil investors sold 9 million barrels of West Texas Intermediate and 2 million barrels of gasoline. Market quotes of US diesel fuel remain the same.
Nowadays most oil processing plants are getting rid of redundant distillate reserves. Hedge fund managers are worried about prospects of the global oil market making gloomy forecasts of Brent and WTI quotes.
