The buying comes as OPEC prepares for more production cuts

Hedge funds and oil prices aren’t like water and oil. Just two weeks after hedge funds sold off after an oil rally, they’re buying oil contracts once again. Reuters‘ John Kemp notes that portfolio managers have been buying a lot of oil recently. Over six of the last seven months, they’ve tacked on about 290 million barrels to their portfolios. Kemp notes that a lot of short positions opened in September and October have since closed. Short positions sit at 40 million barrels, well below the peak of 126 million on October 22.

He cites data from ICE Futures Europe and the U.S. Commodity Futures Trading Commission.

What’s Ahead for Hedge Funds and Oil Prices

A lot of people think that speculation centers around the Trump administration and China. On December 15, Trump could hit China with another $160 billion in tariffs on Chinese goods. Any delay or outright cancelation would provide positive momentum for oil prices. It would also offer a few clues about whether the Trump administration will move forward with a Phase One deal on trade.

More important, however, is yesterday’s meeting among OPEC officials. On Thursday, Saudi Arabia led OPEC members in an agreement to slash production by another 500,000 barrels per day through the end of 2020. This level of cuts was much larger than economists had anticipated.

Oil prices have moved higher in recent days. However, Brent crude futures were off roughly 15% from their April peak. WTI crude is off about 12% since April highs as well.

Related: Hedge Elliott Management May Join Apollo Global Management to Save EP Energy Corp.