Hedge funds have sharply increased their bullish positions on US crude oil, driven by the potential for sanctions on Iranian and Russian oil, as well as the likelihood of additional economic stimulus from China, according to a report by BNN Bloomberg.

According to the Commodity Futures Trading Commission, money managers raised their net-long position on West Texas Intermediate (WTI) by 57,215 contracts, bringing the total to 161,201 contracts for the week ending December 17. This is the biggest increase since September 2023.

This shift in sentiment followed a rise in oil prices, fuelled by the expectation of sanctions that could tighten supplies of Russian and Iranian oil, counterbalancing predictions of a supply surplus in 2025. On the demand side, stronger-than-expected stimulus measures from China enhanced the outlook for the world’s largest crude importer.

The surge in WTI long positions, reaching their highest level in about four months, has brought hedge funds’ stance on the US benchmark closer to that of Brent crude, which saw its own bullish positioning rise to 184,841 contracts.