OPEC+ cut draws hedge funds back into oil market

Portfolio investors were encouraged to return to the oil market early last week by the prospect of production cuts by OPEC and its allies, which offset some bearishness induced by the prospect of an imminent recession.

Hedge funds and other money managers purchased the equivalent of 62 million barrels in the six most important petroleum futures and options contracts in the week ending October 4., according to regulators’ records.

Fund buying concentrated on crude (+46 million barrels) rather than fuels (+15 million) and came ahead of a decision by OPEC+ on October 5 to cut the group’s combined output allocations by 2 million barrels per day.