(Bloomberg) -- Money managers elevated bullish bets on crude by the most in more than three years -- just in time to profit from a long-awaited truce in the U.S.-China trade clash.
Hedge funds increased net-bullish wagers on West Texas Intermediate oil by 52% in the days leading up to Friday's announcement that the U.S. and China inked a deal to ward off a new round of punishing trade levies. The rise was the most since August 2016 and presaged crude's first settlement above $60 a barrel since devastating missile attacks on Saudi Arabia sparked a record price surge in mid-September.
The trade accord “seems like something we can believe in,” said John Kilduff, a partner at Again Capital LLC in New York. “The outlook for growth may not be as dire as we thought.”
The so-called phase-one agreement calls on both nations to hold off on new tariffs that were set to kick in within days, and for China to purchase billions of dollars in American farm products. New York oil futures that had been on pace to end the week little changed jumped to settle at a three-month high. The previous week, crude rallied more than 7% in news of surprise supply curbs by OPEC and partner nations.
Money managers' WTI net-long position, or the difference between bullish and bearish bets, rose to 228,425 futures and options during the week ended Dec. 10, the U.S. Commodity Futures Trading Commission said Friday. Long-only wagers climbed 28% to a 17-week high, while shorts dropped by 33%.
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--With assistance from Robert Tuttle.
To contact the reporters on this story: Joe Carroll in Houston at jcarroll8@bloomberg.net;Catherine Ngai in New York at cngai16@bloomberg.net
To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Joe Carroll, Catherine Traywick
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