Instead the market has seen a slow but steady liquidation with existing longs cut by a total of almost 250 million barrels (15 percent) since Jan. It remains uncertain whether this is merely a pause and the price rally will resume shortly, or whether it marks a temporary peak, with more liquidation and price falls to come.
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The reduction largely reversed an increase of 68 million barrels the previous week, according to position records published by regulators and exchanges (tmsnrt.rs/2Dmlw Xg). Some of the froth has blown off the market in the last six weeks but the hedge fund community still has a very bullish bias towards oil prices.
Portfolio managers have now reduced their net long position in petroleum in five of the last six weeks by a total of 245 million barrels since Jan. The most recent week saw a reduction in net length in NYMEX and ICE WTI (-17 million barrels), Brent (-5 million), U. Fund managers hold a net long position in the six major petroleum contracts amounting to 1,239 million barrels of oil, a level of bullishness that had never been seen until four months ago.
The average management fee for funds launched in 2016 fell to 1.33%, down from 1.6% in 2015.
The average incentive fee for new funds declined to 17.71% from 17.75% in 2015.