2014.11.0304:47:47UTC+00Hedge funds reduce bullish positions on oil behind increasing output

Hedge funds have cut their bullish bets on crude oil holdings amidst record high production levels in the US adding on to a global glut in supply.

Based on data from the US Commodity and Futures Trading Commission, the number of net long positions held by money managers as of the week of October 28th on West Texas Intermediate oil decreased by 2.3%. Long bets similarly fell to the lowest amount in 17 months.

WTI declined by 12% last month making, making October its fourth consecutive losing month after output levels of the OPEC reached its highest in over a year and the US continuing to be at its fastest pace of production since 1983. The International Energy Agency has already revised down it forecast for the growth of demand for crude oil for both this year and 2015.

John Kilduff from hedge fund provider Again Capital LLC in New York says that, “Investors are selling because OPEC is producing too much oil. The focus in November will be on the OPEC meeting and whether they can come to an agreement to make cuts.”

The Organization of Petroleum Exporting Countries, which is responsible for 40% of the world’s supply, produced 30.974 million barrels per day in October, the largest number since August 2013, based on the results of a Bloomberg News survey of analysts and producers. In the US, output levels advanced by 0.4% to 8.97 million barrels daily as of October 24th, says the Energy Information Administration.

The number of net longs for WTI fell by 4,288 futures and options to bring the total down to 182,486 last week. Long positions fell to the lowest since May 2013 at 249,841 with short positions also dropping 2.5% to 67,355.