Oil’s sudden slump seems to have caught optimists by surprise.
Hedge funds increased wagers on rising Brent crude prices for an eighth straight week, the longest streak since 2012, ICE Futures Europe data for the seven days through Tuesday showed.
However, the enthusiasm has proved to be misplaced, at least for now.
The international benchmark posted a weekly loss for the first time since early last month as US President Donald Trump warned OPEC to “take it easy” in cutting supplies and US economic data fell short of expectations.
Brent lost 3.1 percent for the week, after rising 25 percent to start the year.
Crude has rallied this year as Russia and OPEC curbed output to offset a global supply glut, while US sanctions isolated major suppliers Iran and Venezuela.
Yet, an uneven economic outlook, record-smashing US production and worries about a US-China trade war have cast a shadow over sentiment.
“It’s sort of really push-pull in the short term between some fairly constructive bullish setup on the supply side, but really overshadowed by questions on the demand side,” Nasdaq Corporate Solutions LLC director for energy and utilities Tamar Essner said in New York. “At the same time, you also have Trump doing everything to push for lower oil prices.”
Hedge fund bets suggested that they believe the longer-term picture is still bright.
OPEC production last month fell by more than 500,000 barrels, a Bloomberg survey found.
US drilling rig activity last week hit a nine-month low, as investors push companies for spending cuts amid the uncertain outlook.
“We’re continuing to see evidence these rig counts are falling,” Stratas Advisors LLC lead oil market analyst Ashley Petersen said in New York. “We’re getting this on-the-ground evidence of a more stable supply picture.”
West Texas Intermediate on Friday slid 2.5 percent to settle at US$55.80 a barrel in New York.
Brent crude, used to price international oils, dropped 1.9 percent to close at US$65.07 per barrel in London.
In other energy futures trading, wholesale gasoline slid 1.3 percent to US$1.73 per gallon and heating oil lost 1.3 percent to US$2 per gallon, while natural gas gained 1.7 percent to US$2.89 per 1,000 cubic feet.
Gold fell 1.3 percent to US$1,299.20 per ounce and silver dropped 2.4 percent to US$15.26 per ounce, while copper declined 0.5 percent to US$2.93 per pound.
Additional reporting by AP
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