Market News

Yongchang Chin

(Bloomberg) -- Hedge funds are turning less optimistic on crude oil’s prospects, trimming net-bullish bets in a further sign of market softening.

Net-long positions for US marker West Texas Intermediate fell for a fourth week to the lowest since October. The corresponding measure for global benchmark Brent was dialed back by the most since December in a third consecutive drop.

The moves were driven both by a decline in long-only positions, as well as a build in short-only ones, according to data from ICE Futures Europe and the US Commodity Futures Trading Commission.

Oil has sold off in recent weeks amid a host of drivers, with traders concerned that US tariffs and talks on the war in Ukraine could impact market dynamics. In addition, Iraqi exports from its semi-autonomous Kurdistan region may resume, although cartel OPEC+ may defer planned output hikes. WTI capped five weeks of losses last Friday, the longest losing streak since late 2023.

“The latest positioning data reflects the more recent negative sentiment,” said Warren Patterson, head of commodities strategy for ING Groep NV, citing trade and tariff concerns, along with the push for a deal between Russia and Ukraine.

Meanwhile, aggregate open interest in US crude — the number of contracts outstanding — has also declined, and remains near the lowest in around three months even after a small uptick. Investors have been pulling out of oil as US President Donald Trump’s deluge of executive actions disorientated traders.