NEW YORK Feb 14 Oil speculators and hedge funds have rapidly increased their bullish bets on U.S. crude prices to near the highest ever, data showed on Friday, even as some analysts say the United States is on the brink of an oil glut.
The speculator group raised its combined futures and options positions in New York <0#CL:> and London <0#WTCL:> U.S. crude oil contracts by 26,882 to 364,133 contracts in the week to February 11, putting them shy of the 387,000 record hit last July.
The run-up came as oil prices extended a three-week rally toward $100 a barrel. In the week to Tuesday, U.S. crude oil rose from $97.19 a barrel to $99.94 a barrel, driven higher by a sharp demand for heating fuel amid a fierce winter.
Big funds have boosted their net long position by over 80,000 contracts -- equivalent to 80 million barrels, or roughly $8 billion -- over the past four weeks, one of the most rapid run-ups in bullish bets since 2011.
The bullish sentiment is emerging despite medium-term concerns that steadily rising U.S. shale oil production and a long-standing export ban may create a glut of light, sweet crude in the United States by year's end.
The positioning may be more tactical than strategic, as new pipelines help drain crude oil from the Midwest, particularly the Cushing, Oklahoma, delivery point for futures.
"Extreme weakness in WTI over the rest of Q1 can be ruled out given the healthy state of overall US domestic oil demand and the state of product inventories," Barclays said in a report.
But it warned that prices may pull back soon as Gulf Coast refiners head into the peak of what is expected to be a larger than usual maintenance season, reducing demand for crude.
"Over the coming weeks however, we expect the upward momentum in WTI to slow down if it crosses the $101/bbl level again, partly from the weight of softening US Gulf Coast balances," it said.
Despite the bitter cold that has boosted demand for heating fuel and New York diesel prices, speculators resisted chasing the market. Net long positions rose by just over 2,000 contracts to some 29,000 lots, the highest since September but lower than the peak of past winters.
Ultra-low sulfur diesel (ULSD), commonly known as heating oil, rose 1.5 percent in the week from Tuesday, Feb. 4 to Tuesday, Feb. 11. That corresponded with a nearly 3 percent rise in U.S. crude oil prices.
Nor was there a bullish mood for gasoline prices, however. Net length for RBOB oil futures dipped slightly to 25,603, the lowest since last June's 23,000 lots. (Reporting By Elizabeth Dilts and Jonathan Leff; Editing by Diane Craft)