The number of oil futures contracts held by traders rose to a six-month high, buoyed by optimism that China’s reopening of its economy will spur extra demand for raw materials.
(Bloomberg) —
The number of oil futures contracts held by traders rose to a six-month high, buoyed by optimism that China’s reopening of its economy will spur extra demand for raw materials.
Total open interest, as it is known, rose to 5.24 million contracts in the most recent data, the highest since June 20. Holdings are up by about 10% so far this year.
A lack of liquidity has plagued oil markets since traders rushed for the exits in the aftermath of the price spike toward $140 a barrel that followed Russia’s invasion of Ukraine. This year’s increase comes as China bolsters its economy and ditches Covid-linked movement restrictions, spurring predictions of a demand boom in the coming months.
Oil markets, along with other commodities, “shrugged off earlier weakness following the collapse in Northern Hemisphere energy demand during the serendipitously warm winter, increasingly focused on China’s looming demand impulse,” JPMorgan Chase & Co. analysts including Tracey Allen said in a note.
Despite the recent increase, holdings remain about 20% lower than the same time last year.
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