Hedge funds sold a net $6.6 billion of Brent crude positions in the week before the US midterm elections, according to Goldman Sachs analysis of US Commodity Futures Trading Commission (CFTC) positioning data, as the market suffered its largest one-week dollar decline on record.

Robert Quinn, a managing director in Goldman Sachs' fixed income, currencies and equities division, found that managed money sold the positions between 27 October and 3 November. It was the seventh time in the past five years that weekly selling in Brent topped $6 billion. About $4.9 billion of the selling, roughly three-quarters, came from traders closing long positions rather than opening new short bets.

The selling helps explain the scale of the collapse. Brent crude settled at $98.32 a barrel on Friday 6 November, down 13.32% on the week, its sharpest weekly fall since 2020. According to Reuters, citing London Stock Exchange Group data going back to 1988, it was the largest one-week dollar decline for Brent since records began. Brent had traded near $118 a barrel on 30 October.

Positioning had been heavily crowded before the fall. Managed money's net long in Brent had rebuilt to about $28 billion at one point in October, but had dropped to roughly $19 billion by 4 November, well below the peak of more than $45 billion seen during the Iran war-premium euphoria in April.

The CFTC data only runs to Tuesday 3 November, so it excludes the 8.7% single-day plunge on Wednesday 4 November, when the Democrats swept the midterms and open interest fell by $2.7 billion in a day. The next positioning report, due on Friday, is expected to show even heavier selling.

There are already signs of a turn. Brent rebounded 3.9% across Thursday and Friday, three-month implied volatility rose, and call buying reappeared in the options market. UBS analyst Dominic Ellis has warned that fundamentals still offer support, pointing to a global destocking trend of nearly 700 million barrels. With fresh US strikes on Iran's Qeshm Island over the weekend, the war premium that was priced out in a week could return just as fast.