Long-term, strategic investors may look at the current historically low prices as “an attractive entry point to increase their oil exposure”.
Meanwhile, tactical investors can leverage their oil exposure to position around increased volatility or improve capital efficiency.
“This is especially relevant given current speculative bullish positioning by hedge funds, which, at 20% of all open contracts, remains elevated above historical standards,” said Leung.
“The unwinding of these positions will add to volatility and fuel further pressure to oil prices.”
