To The Moon

Hedge funds increased their bullish crude oil positions to the highest level since last November in the week preceding the U.S. military's arrest of Venezuelan President Maduro, as markets weighed growing speculation about an imminent U.S. land assault on the South American nation. Data from the CFTC revealed that, for the week ending December 30, money managers raised their net-long positions in the U.S. benchmark crude by 2,045 contracts, reaching a total of 19,711 contracts and marking the largest increase in two months. According to ICE Futures Europe data, hedge funds' bullish bets on Brent crude also climbed to a four-week high. This positioning shift occurred as heightened U.S. pressure on Venezuelan oil exports fueled expectations that Washington might undertake further military action against the energy-rich country. Although Venezuela's oil exports constitute less than 1% of global crude supply, the revenue they generate is a fiscal lifeline for the Maduro government. President Maduro was captured by U.S. forces last weekend and appeared in a New York court on Monday, pleading not guilty to charges of narcoterrorism. Concurrently, U.S.-led negotiations aimed at ending Russia's war in Ukraine encountered new complications, dampening investor confidence in the near-term free flow of Russian crude. Russian President Putin announced he would adjust his country's negotiation stance after claiming a Ukrainian drone had attacked his residence. This data release is among the first major updates following a U.S. government shutdown that disrupted operations at the Commodity Futures Trading Commission (CFTC) and caused a significant backlog of trader position reports. The schedule for report publications is now expected to return to normal.