Investor positions in Brent crude oil futures have risen to a historic high and outnumbered contracts in U.S. futures by the most ever as more traders held the North Sea benchmark as a truer reflection of global market conditions.

Brent's open interest on the Intercontinental Exchange (ICE), or the number of outstanding contracts held by market players, increased to 1.99 million lots as of the end of March. That compared with 1.72 million lots for crude futures on the New York Mercantile Exchange (Nymex).

For a long time, Nymex's West Texas Intermediate (WTI) futures had been the leading benchmark, given the United States' position as the world's biggest consumer, importer and trader of crude oil. That changed this decade with the shale boom, which turned the U.S. into one of the world's top producers and reduced its need to import.

At the same time, a U.S. ban on exporting crude has meant the country's oil is trapped in storage tanks at home. That has pulled WTI prices down to levels that do not reflect global markets and diminished its hedging allure for traders.

In late 2014, Brent's open interest overtook that of U.S crude futures. In the same year, Brent's weighting in several commodities indexes increased at the expense of WTI, according to bankers. WTI had been popular with financial players, but this seems to be also changing with more hedge funds likely turning to Brent, said Richard Gorry, director of consultancy JBC Energy Asia.

"I think if WTI remains a regional crude, then Brent will continue to benefit. In the unlikely event that the U.S. lifted the export ban, then we might see WTI reassert its dominance," Gorry said.

Source: www.reuters.com

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