Hedge Funds Slash Crude Oil Bets Amid U.S.-Iran De-escalation

Hedge funds significantly reduced their bullish bets on crude oil during the week ending November 3, recording the largest decrease in net-long positions since June. Money managers cut combined positions on West Texas Intermediate and Brent benchmarks by 78,492 lots, leaving a total of 272,075 lots.

This market shift followed a Democratic sweep of the U.S. Congress and rare de-escalatory signals exchanged between the Federal government of the United States and Iran. The timing of these reductions allowed funds to profit from a selloff that occurred on Election Day.

Market analysts noted that this behavior mirrors a trend from earlier this summer, when the United States and Iran reached an interim agreement to reopen the Strait of Hormuz. Data for these position changes were provided by the United States Commodity Futures Trading Commission and ICE Futures Europe.