(John Kemp is a Reuters market analyst. The views expressed are his own)
LONDON- Hedge funds made few changes to their petroleum positions last week while traders awaited a decision on production levels by the Organization of the Petroleum Exporting Countries (OPEC) and its allies.
Money managers cut their combined position in the six most important futures and options contracts by the equivalent of only three million barrels in the week to June 29, exchange and regulatory records show.
The total position remained high at 940 million barrels, in the 84th percentile for all weeks since the start of 2013, and the third week positions have been in a range of 940 million to 945 million barrels.
Portfolio managers remain bullish on the outlook for prices, with long positions outnumbering short ones by a ratio of 5.76:1, the 78th percentile since 2013.
But with a substantial net long position already established and prices above the inflation-adjusted average since 2000, new buying has stopped since the middle of June.
The most recent week saw small purchases of U.S. gasoline (+7 million barrels) and European gas oil (+1 million) but they were more than offset by sales of Brent (-1 million) and NYMEX and ICE WTI (-10 million).
With crude prices now above their post-2000 average in real terms, pressure is mounting on OPEC and its allies, collectively known as OPEC+, to respond and prevent the market from overheating by increasing production.
Most hedge fund managers are betting that OPEC+ will be slow to relieve the market shortage, preferring to allow prices to overshoot for a while.
But the longer and higher the overshoot, the more the pressure will build on OPEC+ to adjust production strategy, which explains why bullish positioning has been tempered for now.
(Editing by David Goodman) ((firstname.lastname@example.org))