August 18, 2017 / 8:29 PM / a month ago

Hedge funds scale back bullish bets on U.S. crude

FILE PHOTO: Crude oil storage tanks are seen from above at the Cushing oil hub, appearing to run out of space to contain a historic supply glut that has hammered prices, in Cushing, Oklahoma, March 24, 2016. Picture taken March 24, 2016. REUTERS/Nick Oxford/File Photo

NEW YORK (Reuters) - Hedge Funds and money managers cut their bullish bets on U.S. crude for the second week in a row, data showed on Friday, as prices tumbled on a strong dollar and persistent worries about oversupply.

The speculator group cut its combined futures and options position in two major NYMEX and ICE markets by 9,804 contracts to 294,392 in the week to August 15, U.S. Commodity Futures Trading Commission (CFTC) data showed.

A majority of the decline came as money managers trimmed their gross long positions, data showed.

U.S. oil futures on the New York Mercantile Exchange dipped by about 3.3 percent during the period.

The dollar rose broadly as traders unwound bearish bets against the U.S. currency that have come in the wake of increasing tensions with North Korea and underwhelming inflation data.

In addition, the absence of further abrasive rhetoric by U.S. President Donald Trump and North Korean leader Kim Jong Un helped bring investors back to the dollar, analysts said.

The firm greenback makes oil more expensive for holders of other currencies.

Meanwhile, the Organization of the Petroleum Exporting Countries raised its outlook for oil demand in 2018 and cut its forecasts for output from rivals next year. Another increase in the group’s production suggested the market would remain in surplus despite efforts to limit supply.

OPEC said its oil output rose by 173,000 bpd in July to 32.87 million bpd, led by the exempt producers plus top exporter Saudi Arabia, citing figures it collects from secondary sources.

In the United States, crude stockpiles have fallen for seven straight weeks. [EIA/S]

In refined products, speculators trimmed their bullish bets on U.S. gasoline after weeks of increases as inventories began to climb after consistent declines.

Bullish wagers on ultra low sulfur diesel futures and options climbed, however, to the highest in nearly four months on the back of strong demand.

Inventories of diesel, heating oil and jet fuel were approaching their lowest seasonal levels in three years.

Reporting by Devika Krishna Kumar; Editing by Andrew Hay

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