(John Kemp is a Reuters market analyst. The views expressed are his own.)
By John Kemp
LONDON (Reuters) - Hedge funds stuck with their existing bearish view on oil prices last week - leaving positions in petroleum broadly unchanged after two weeks of heavy selling at the end of September and the start of October.
Hedge funds and other money managers sold the equivalent of just 4 million barrels in the six major petroleum futures and options contracts in the week to Oct. 15 (tmsnrt.rs/33IESn8).
The pause came after sales totaling 190 million barrels over the two previous weeks, according to records published by the U.S. Commodity Futures Trading Commission and ICE Futures Europe.
Portfolio managers were small sellers last week of NYMEX and ICE WTI (-11 million barrels), Brent (-3 million), and European gasoil (-0.5 million), but small buyers of U.S. gasoline (+9 million) and U.S. diesel (+1 million).
Hedge funds now hold just 2.5 long positions for every short position, down from a recent high of almost 9:1 in April and the most bearish position since the middle of January.
Moreover, if passive structural long positions, which rarely change, are excluded, fund managers were running a dynamic net short position of 58 million barrels, also the most bearish since mid-January.
The hedge fund community has become very pessimistic about the outlook for prices amid increasing concern about the state of the global economy and prospects for oil consumption in 2019/20.
But with so much bearish sentiment already incorporated into the market, fresh selling dried up, which should ease some of the downward pressure on prices, at least temporarily.
The large number of short positions that have been established has created the potential for a sharp rally if they have to be covered, but that depends on an improvement in the economic outlook.
Editing by David Evans