Hedge Fund managers have cut their position in petroleum for the second time in three weeks in response to a resurgence of coronavirus infections. The resumption of airlines for international passenger flights is likely postponed. Money managers sold 35 million barrels equivalent in six most important petroleum futures and options contracts in the week to 6th April.
With the continuing coronavirus infections and strict travel control, the pattern is consistent. They are now likely to push any major resumption of international passenger aviation back from mid-year until the fourth quarter. The weakness in jet fuel consumption will delay the recovery of refineries crude processing to pre-epidemic levels. This has put crude consumption on a weaker trajectory in the second and third quarters.
The producer group OPEC+ decided that it will start raising crude output from May. There are indications from US shale as well to increase the production from the second quarter. These have curbed the bullish sentiments. The Hedge Fund community has been relatively bullish on the outlook for oil prices for the remainder of the year. Even after the recent sales, the ling positions outnumber the bearish short ones by the ratio of 5:2:1. It is almost 71st percentile for all weeks over the same period.