Hedge Funds cut their net-long exposure to Brent Crude by 11,851 contracts during the week ending October 22, according to the latest data from the ICE Europe Exchange. Speculative positions have now been reduced in seven out of the last eight weeks with the current net position of 150,161 some 35 percent below the record peak in August when the Syrian conflict and Libyan strikes lifted the price to USD 117.34/barrel.
Interestingly, both the gross long and short positions were increased, indicating some uncertainty about the near-term direction. This could help lift volatility from its current historically low levels of below 20 percent. The gross short actually reached 83,466 contracts, the highest since the exchange began reporting this data back in January 2011.
The speculative bubble which continued to inflate over the summer has now popped with the percentage of speculative net-long positionings compared with total open interest in Brent Crude now back down close to eight percent compared with 12.1 percent back on September 1. Compared with the previous big unwinds of speculative extended positions some further long liquidation can not be ruled out. However, the fact that both shorts and longs are rising has left the market less one-sided than just a few weeks ago.
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