OPEC supply risks approaching, hedge funds are shorting oil.

Hedge funds have significantly increased their short positions in Brent crude oil to the highest level since October last year. With market expectations rising for OPEC+ to increase production, the bearish bets continue to accumulate. According to data from the Intercontinental Exchange Europe Futures, fund managers increased their short positions in Brent crude oil by 16,922 contracts to 130,019 contracts in the week ending May 27, the highest in eight months. Meanwhile, data from the U.S. Commodity Futures Trading Commission shows that bets purely shorting WTI crude oil have risen to a three-week high. Oil prices fell this week as concerns about oversupply were sparked by the prospect of another significant increase in production by OPEC+. A group led by Saudi Arabia will hold a meeting on Saturday to decide on production levels for July. Prior to this, the group had conducted preliminary negotiations on a third consecutive increase in supply. Adding to the woes, investors are assessing some optimistic signals from Washington regarding the Iran nuclear agreement. Relaxing sanctions on OPEC member countries will increase supply and therefore depress oil prices.