Peeking Into The Future Thru Futures, What Hedge Funds Were Buying This Week

WTI crude oil: Currently net long 565.7k, down 10.4k.

OPEC+ plans to increase production over the next three months, by a cumulative 1.1 million barrels per day. Since early November last year, WTI is up 83 percent and was up 102 percent at its March 8th high.

Evident in their new production plan, OPEC+ producers are obviously hopeful about the global economy.

In the US, crude production in the week to March 26 rose 100,000 b/d to 11.1 mb/d. Crude imports rose as well, up 523,000 b/d to 6.1 mb/d. As did distillate stocks, which were up 2.5 million barrels to 144.1 million barrels. Stocks of crude and gasoline, however, fell – down 876,000 barrels and 1.7 million barrels respectively to 501.8 million barrels and 230.5 million barrels. Refinery utilization increased 2.3 percentage points to 83.9 percent.

Despite the OPEC+ plan to raise output, WTI ($61.45/barrel) jumped 3.9 percent on Thursday, although Brent was unchanged; WTI rallied from just below its 50-day moving average, which it has hugged for over two weeks now. Should the crude manage to rally further, nearest resistance lies at $62.20s.

E-mini S&P 500: Currently net short 50.3k, up 22k.

Six sessions ago, bulls defended the 50-day. Through Thursday’s high, they then rallied the S&P 500 (4019.87) 4.4 percent to post a new high (more on this here). There is now new support at 3980s.

In the week to Wednesday, SPY (SPDR S&P 500 ETF), VOO (Vanguard S&P 500 ETF) and IVV (iShares Core S&P 500 ETF) took in $514 million, much softer than the prior week’s $11.5 billion, but inflows nevertheless (courtesy of ETF.com). In the same week, US-based equity funds gained $2.6 billion, which once again was softer than the prior week’s $10.9 billion, but in the last eight weeks inflows totaled $99.5 billion (courtesy of Lipper).

In the meantime, money market funds went up $111 billion in just the last two weeks, to $4.5 trillion (courtesy of ICI). In the first quarter, these funds bulked up by $202 billion, even though the S&P 500 rallied 5.8 percent. In the past, this so-called cash-on-the-sidelines moved into stocks once the latter began to rally. Not this time. When stocks bottomed in March last year, these assets were $3.9 trillion.

As things stand, post-this week’s mini breakout, bulls have the upper hand. At this point, they must genuinely be hoping that these funds begin to contract and stocks get their fair share.

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