Hedge funds and money mangers cut bullish bets on U.S. crude for the second straight week, data showed on Friday, as oil prices fell amid signs of rising output in the United States, Canada and Libya, adding to the bearish sentiment in the market.
The speculator group cut its combined futures and options position in New York and London by 60,882 contracts to 224,058 during the week to May 2, data from the U.S. Commodity Futures Trading Commission (CFTC) showed.
Money managers cut gross long positions in New York Mercantile Exchange crude oil to the lowest since early November.
U.S. oil futures on the NYMEX fell nearly 4 percent and averaged about $49 per barrel during the five trading sessions ended May 2.
Compliance with output cuts agreed by the Organization of the Petroleum Exporting Countries (OPEC) and other producers fell to 90 percent in April from a revised 92 percent in March, according to a Reuters survey. Earlier, the survey showed compliance in March was 95 percent.
OPEC along with Russia and other non-OPEC members agreed to cut output 1.8 million barrels per day (bpd) in the first half of 2017. The countries plan to meet on May 25 and are widely expected to maintain output limits for the rest of the year.
However, Russia said on Thursday it had not yet decided whether to extend the agreement.
Libya’s National Oil Co has said production had risen above 760,000 bpd to its highest level since December 2014, and it plans to keep boosting production.
In the United States, energy companies added oil rigs for a 16th consecutive week, bringing the total count up to 703, the most since April 2015, data showed.
Still, U.S. crude inventories have fallen for the past four weeks. Last week, stockpiles fell by 930,000 barrels in the week to April 28, less than half the decreased forecast by analysts.
Among refined products, speculators slashed bullish bets in gasoline, switching to a net short position for the first time since August.
Gasoline stocks rose 191,000 barrels, much less than the 1.3 million barrel gain predicted in a Reuters poll.
Gasoline demand for the past four weeks was down 2.7 percent from a year earlier, so stocks of the fuel, at 241.2 million barrels, remained 10 percent higher than the seasonal average over the past decade.
“The net short position of 3,298 contracts is close to the bottom of the five-year range, an oversold condition in our view,” said Tim Evans, energy futures specialist at CitiFutures.
In ultra low sulfur diesel, money mangers turned net short for the first time since November. The group had combined futures and options net short position of 974 contracts on the NYMEX.
Source: Reuters (Reporting by Devika Krishna Kumar in New York; editing by Paul Simao, David Gregorio, Grant McCool)