Short covering drives gain in net longs in oil futures, CFTC data shows

Hedge funds and other speculators covered their ´short´positions in crude oil futures and options Stateside last week, which analysts said at least in the very short-term might be a cautious endorsement of the staying power of recent gains in oil prices.

Short positions held by speculators in West Texas Intermediate, which benefit if the oil price drops, fell by 20% - to the lowest since June - according to the latest weekly tally from the US Commodity Futures Trading Commission. Longs climbed 2.4%, the biggest gain in six weeks.

Combined, those two trends drove a 17% increase in net-long positions over the week ending on 15 March.

Nonetheless, some commentators took a so-called 'contrarian' view on the data, interpreting it as just a very cautious endorsement of recent gains in oil prices, as it was driven mostly by so-called 'short-covering'.

As of 09:33 front month West Texas Intermediate crude oil futures were down by 1.430% to $40.56 per barrel in ICE trading and Brent crude futures off by 1.104% to $40.75 per barrel.