Money Managers Find Favor In Oil
Posted 11-02-2009 at 05:28 PM by HardAssetsInvestor.com
Real-time Monetary Inflation (last 12 months): 3.8%
For most of this year, money managers have been middling buyers of crude oil futures. Overall, the disposition of the funds toward petroleum has been—how shall I put it?—cautiously bullish.
That was, at least, the case until this month. In October, the spark was set to the funds' tinder. Funds are now more bullish than they've been over the last three years. Yes, even more bullish than last year when crude prices raced above the $140 level.
At the high, er, water mark last summer, two-thirds of funds' oil positions were long. Now, more than 82 percent are. Not as bullish as fund runners' positions in gold and silver, mind you—there they lean 99 and 97 percent, respectively, on the long side—but big nonetheless.
Money Managers' Long Exposure To Crude Oil
Fund runners, too, hold the largest net interest in the crude oil market, even larger than producers and commercial users. The funds are now the only trading block holding a net long position: Commercials are short; swap dealers are short and noninstitutional traders are short.
That was pretty much the market makeup last spring, ahead of the market's peak. The question traders are asking themselves now is this: How long before the peak this time?
For most of this year, money managers have been middling buyers of crude oil futures. Overall, the disposition of the funds toward petroleum has been—how shall I put it?—cautiously bullish.
That was, at least, the case until this month. In October, the spark was set to the funds' tinder. Funds are now more bullish than they've been over the last three years. Yes, even more bullish than last year when crude prices raced above the $140 level.
At the high, er, water mark last summer, two-thirds of funds' oil positions were long. Now, more than 82 percent are. Not as bullish as fund runners' positions in gold and silver, mind you—there they lean 99 and 97 percent, respectively, on the long side—but big nonetheless.
Money Managers' Long Exposure To Crude Oil
Fund runners, too, hold the largest net interest in the crude oil market, even larger than producers and commercial users. The funds are now the only trading block holding a net long position: Commercials are short; swap dealers are short and noninstitutional traders are short.
That was pretty much the market makeup last spring, ahead of the market's peak. The question traders are asking themselves now is this: How long before the peak this time?
Brad Zigler began his career as a trader for ContiCommodity, the trading arm of a the world's largest privately held grain dealer. Prior to his current role as managing editor of Hard Assets Investor, Brad was head of marketing, research and education at Barclays Global Investors' iShares exchange-traded funds complex and at Pacific Exchange's (now NYSEArca)options market. Representing the Options Industry Council, Brad has twice addressed Congressional and Senate panels on risk management and derivatives. In addition to editing for the Corporate Communications Broadcast Network, the Journal of Indexes, and CRB Trader, Brad has written for Mutual Funds, Financial Planning, Financial Advisor, Futures, Registered Rep. and Ticker magazines as well as The Street.com and MarketWatch.com. Brad's also been a financial correspondent for European Press Network, North Bay Business Journal and a PBS/NPR affiliate.
Interested in commodities? Check out HardAssetsInvestor.com for:
