Hedge funds turned the most bullish on Brent oil since April as unrest in Iran, OPEC's fourth-biggest producer, revived risk premium in crude prices.
Money managers increased their long-only stance on Brent crude by 85,496 lots to 208,461 lots in the week ended Jan. 13, the highest in nine months, data from ICE Futures Europe show. Long-only bets on West Texas Intermediate also rose to a five-month high, according to the Commodity Futures Trading Commission.
Traders are closely watching nationwide protests across Iran and assessing the risk of US intervention that could disrupt the country's roughly 3.3 million barrels-a-day of oil production. US President Donald Trump warned that the country's regime would “pay hell” if protesters were killed and that he thinks it's a good idea if US citizens evacuate from Iran. The scale of risk showed up clearest in options markets, with the skew toward bullish calls at one point turning the biggest for Brent futures since last summer and volatility is surging.
The US president has since softened his rhetoric against Iran in the period not covered by this data, saying in a social media post on Friday that he respects the regime's decision to cancel scheduled hangings of protesters.
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