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GBP/USD extends slide to the 1.2400 area
GBP/USD retreated further during the American session and hit fresh daily lows under 1.2400. Risk aversion and higher US yields weighed on the pair, that after Friday’s slide, is about to end the week flat.
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On Wednesday, the Commodity Futures Trading Commission (CFTC) reported that the net long position in crude oil futures and options held by non-commercial investors rose to 235.6K contracts this week, up from the previous week’s figure of 226.1K.
Non-commercial investors are deemed to be mostly large speculators such as hedge funds and other managed money investors. They typically engage in futures positions as an attempt to profit from market movements.
The increase in long positions of nearly 10K contracts in this week’s CFTC report marks the fourth consecutive week in which positions have risen, suggesting that investors are bullish on oil prices going forward.
The positive sentiment has been driven mainly by a combination of supply-side risk, progress in the US-China trade talks, and easing tensions in the Middle East. Brent crude futures have climbed about 8% so far this year and rose close to the highest level since November on Tuesday.
Experts expect the supply-side risks to remain elevated in the near term, with a possible disruption in supply from Brazil’s sole major oil producing region and continued OPEC-led production cuts supporting the upside.
Meanwhile, on the demand side, China and the US are close to reaching a deal on trade, and any significant agreements related to this could trigger a further rise in oil prices.
To conclude, the combination of strong fundamentals, risk sentiment and geopolitical catalysts appear to be contributing to the increased net long positions in crude oil futures and options, with the possibility of further price gains in the months ahead.
