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Hedge funds slashed their bets on falling oil prices, leaving them the most bullish on U.S. crude futures in two months.

Money managers’ net-long position in West Texas Intermediate rose by 14,821 contracts to 147,678 futures and options in the week ended Sept. 15, according to data from the Commodity Futures Trading Commission. That’s the highest level since July 7. In contrast, traders curbed their bullish positions in European benchmark Brent by the most in a month.

The Organization of Petroleum Exporting Countries assumes crude prices will rise to $80 by 2020 as output falls elsewhere. U.S. production could sink by the most in 27 years in 2016 as the price rout extends a slump in drilling. Speculators closed out short positions two days before the Federal Reserve decided not to raise key U.S. interest rates.

“The market’s not as oversupplied as we think it is,” David Pursell, a managing director at investment bank Tudor Pickering Holt & Co. in Houston, said in a phone interview. “The news out of OPEC is more bullish, U.S. production is falling and demand is great right now.”

The U.S. benchmark oil contract fell 2.9 percent in the report week to $44.59 a barrel on the New York Mercantile Exchange. Prices climbed 4.5 percent Monday to $46.68.

Production Drop

OPEC assumes crude prices will rise by about $5 a year through 2020. Production from nations outside the group will be 58.2 million barrels a day in 2017, 1 million lower than previously forecast, according to an internal report. The impact of low prices is “most apparent on tight oil, which is more price reactive than other liquids sources,” according to the report.

U.S. output could sink by 400,000 barrels a day next year after a prolonged period of low prices forced producers to idle more than half the rigs seeking oil, the International Energy Agency said in a monthly report. That would be the largest one-year decline since 1989, according to U.S. government data.

“There is quite a discernible shift in sentiment because production declines are quite high,” Amrita Sen, chief oil market analyst for Energy Aspects Ltd. in London, said by phone. “There’s a realization that U.S. production is rolling over.”

Money managers reduced short positions, or bets that prices will fall, by 14,569 contracts, CFTC data showed. Long positions, or bets on rising prices, increased by 252.

Other Markets

In London, money managers reduced their net-long position in Brent crude by 6,612 contracts to 161,846 in the period to Sept. 15, data from the ICE Futures Europe exchange showed on Monday.

In other markets, net bullish bets on Nymex gasoline rose 3.5 percent to 16,562, CFTC data show. Futures fell 4.9 percent to $1.3329 a gallon. Net bearish wagers on U.S. ultra low sulfur diesel expanded by 12 percent to 28,057 contracts. Diesel futures dropped 5.9 percent to $1.50 a gallon.

The Fed decided not to increase rates for the first time in almost a decade as Fed Chair Janet Yellen said slower growth in China, the second biggest oil-consuming country after the U.S., contributed to volatility across markets and that overall financial conditions have tightened.

“By Tuesday, money managers were closing out their short positions because of the expectation that the Fed would leave rates unchanged, which they worried would mean the dollar stays weaker and commodity prices rise,” Andy Lipow, president of Lipow Oil Associates LLC, said by phone from Houston.

— With assistance by Grant Smith