(John Kemp is a Reuters market analyst. The views expressed are his own)
LONDON- Hedge fund managers purchased petroleum derivatives for the second week running, though buying was in small volumes in most contracts, with trading quiet around the end-of-summer holiday period.
Money managers bought the equivalent of another 16 million barrels in the six most important petroleum futures and options contracts in the week to Sept. 7.
The purchases built on 60 million barrels of buying the previous week, which was the second-largest volume this year, after Hurricane Ida disrupted oil production in the Gulf of Mexico.
The only significant change last week was substantial buying of European gas oil (+12 million barrels), building on large-scale buying the previous week (+21 million barrels).
Elsewhere, there were only small purchases of Brent (+6 million), NYMEX and ICE WTI (+1 million) and U.S. diesel (+1 million), partially offset by small sales of U.S. gasoline (-4 million).
Portfolio managers remain moderately bullish towards oil, with a combined position of 753 million barrels (70th percentile for all weeks since 2013) and long positions outnumbering short ones by a ratio of 5.36:1 (72nd percentile).
But much of the bullishness is concentrated in middle distillates, where long positions outnumber short ones by a ratio of 9.1:1, which is much higher than crude (5.3:1) or gasoline (2.8:1).
Fund managers appear to be betting that manufacturing and freight will remain strong, even as the coronavirus resurgence continues to restrict cross-border aviation.
(Editing by David Goodman ) ((email@example.com))