Hedge funds became the most bullish on U.S. crude oil in more than five months as a new pipeline from Oklahoma to Gulf Coast refineries eased a supply bottleneck, driving prices above $100 a barrel.
Money managers increased net-long positions for benchmark West Texas Intermediate crude by 11 percent in the week ended Feb. 11, U.S. Commodity Futures Trading Commission data show.
Short positions fell 34 percent, the biggest decline since March 2011, as the opening of the southern part of TransCanada Corp.’s Keystone pipeline in January reduced supplies at Cushing, Oklahoma, the delivery point of WTI futures traded on the New York Mercantile Exchange. Prices also gained as cold weather in the eastern U.S. drained stockpiles of distillate fuel, a category that includes heating oil and diesel.
“Speculators were waiting to see what impact the opening of the Keystone pipeline would have on supplies at Cushing and now they have it,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “Winter heating demand has been the other factor that’s been moving the market.”
Crude advanced $2.75, or 2.8 percent, to $99.94 a barrel on the Nymex in the report week. Futures topped $100 in intraday trading for the first time since Dec. 30 on Feb. 7. WTI rose 50 cents to $100.80 a barrel at 10:14 a.m. in New York.
Futures began the reporting period with a gain of 19 cents to $97.38 a barrel on Feb. 5 after a U.S. government report showed that stockpiles of distillate fuel dropped for a fourth week because of cold weather. Inventories of distillate fell 2.36 million barrels to 113.8 million in the week ended Jan. 31, the Energy Information Administration said.
WTI rose 0.5 percent to at $97.84 on Feb. 6 as applications for U.S. unemployment benefits fell for the first time in three weeks. Jobless claims dropped by 20,000 to 331,000, the Labor Department said.
Crude surged above $100 the next day for the first time this year after weaker-than-forecast jobs growth triggered speculation about the outlook for Federal Reserve stimulus. The Labor Department said payrolls gained 113,000 in January, less than the median estimate of 180,000 in a Bloomberg survey of economists. Prices settled at $99.88 and reached $100.21 after the close of floor trading.
Oil rose 18 cents to $100.06 a barrel on Feb. 10, the highest settlement since Dec. 27. Futures fell 12 cents to $99.94 on Feb. 11 amid speculation that a government report would show that nationwide crude supplies rose and as Federal Reserve Chairman Janet Yellen said she expected the Fed to continue curbing asset purchases.
WTI climbed as much as 0.5 percent to $100.60 after the close of floor trading on Feb. 11 as an industry group, the American Petroleum Institute, said that Cushing stockpiles tumbled the prior week by 2.49 million barrels.
Futures advanced 0.4 percent to $100.37 on Feb. 12 after the EIA reported that Cushing supplies dropped to 37.6 million barrels in the week ended Feb. 7, the lowest level since Nov. 1.
“The CFTC data reflects markets activity,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “Oil is back above $100 and poised to move higher.”