Speculators load up on Brent, Gasoil - ING

Speculators sharply boosted their net long positions in ICE Brent and gasoil futures last week, driven mainly by new long entries as they focused on short-term market tightness. While crude balances should remain snug through Q3, a surplus looms in Q4, suggesting these speculative bets may soon face headwinds, ING's commodity analysts Warren Patterson and Ewa Manthey note.

Fresh longs drive oil bets higher

"The latest positioning data shows that speculators increased their net long in ICE Brent by 55,630 lots over the last reporting week to 222,347 lots as of last Tuesday. The move was predominantly driven by fresh longs entering the market. Speculators appear to be influenced more by short-term dynamics rather than the medium-term outlook."

"The oil balance suggests the market should be tight through the third quarter, before moving into a large surplus from the fourth quarter. Data shows that speculators increased their net long in ICE gasoil by 12,064 lots to 83,784 lots as of last Tuesday."

"This buying is unsurprising, given the support we have seen in the middle distillate market more recently, with inventory data pointing to tightness."