Trump’s Return, Middle East Geopolitical Tensions Increase Oil Bullish Bets Hit 4-Month Highs

Bullish oil bets hit a four-month high during the penultimate week of the year, as investors brace for a new year that will see Donald Trump return to the White House.

Money managers increased their net long positions in West Texas Intermediate crude by 21,694 contracts to 182,895 contracts during the week ended Dec. 24, according to the Commodity Futures Trading Commission. Oil futures traded at a spread of less than $3 during the week, suggesting that the increase in bullish bets on crude prices was due to changes in long-term positions rather than a response to short-term price movements.

The increase comes after a week in which hedge funds increased their bullish bets at the fastest pace in a year. While the expected oversupply and weaker demand in China are casting a shadow over the market as the new year begins, investors are still bracing for the risk of higher prices as Trump returns to the White House and conflicts in Ukraine and the Middle East continue to escalate. The US president’s stance on Iran, a major oil exporter, is a key factor in traders’ expectations.

Algorithmic traders turned their positions in WTI and Brent crude to net longs earlier this month and have continued to extend those positions, according to Bridgeton Research.