LONDON- Hedge funds were net purchasers of petroleum futures and options for the third week running last week as managers gambled that the market has already hit its trough.

Hedge funds and other money managers purchased the equivalent of 29 million barrels in the six most important petroleum futures and options contracts in the week ending April 14.

Purchases over the last three weeks have totalled 83 million barrels, after portfolio managers sold 688 million barrels over the previous 11 weeks.

Last week’s adjustment came entirely from the creation of new long positions, after the previous week’s short-covering faded and short positions were unchanged.

Funds were net purchasers of NYMEX and ICE WTI (+24 million barrels), Brent (+8 million) and U.S. gasoline (+1 million) but sellers of European gasoil (-4 million) and left their net position in U.S. diesel unchanged.

Crude oil has been hardest hit by a combination of increased production from Saudi Arabia and Russia as well as a collapse of refinery consumption.

But near multi-decade low prices have already forced a truce in the Saudi-Russian price war and idled more than one-third of U.S. drilling rigs over the last five weeks.

Evidence of price-driven reductions in output, especially in the United States, seem to have encouraged portfolio managers to start increasing their crude positions slightly since March.

In the hard-hit U.S. crude sector, portfolio managers have raised their combined net position in NYMEX and ICE WTI for six weeks running by a total of 82 million barrels.

By contrast, fuels such as gasoline, diesel and gasoil remain under pressure from the disruption in business and transportation activity as a result of the coronavirus epidemic.

Fuels could be most at risk if temporary coronavirus lockdowns turn into a longer cyclical downturn in economic activity. Moreover, fuels are also harder and more expensive to store in large volume.

Unlike crude, few fund managers seem ready to call a turning point in the fuel price cycle yet.

(Editing by Jane Merriman) ((john.kemp@thomsonreuters.com; +44 207 542 9726 on twitter @JKempEnergy; Reuters Messaging: john.kemp.thomsonreuters.com@reuters.net))