LONDON, Jan 4 (Reuters) – Portfolio investors have started to rebuild bullish positions in the oil market, reassessing earlier fears about the likely impact of the Omicron variant of coronavirus on major economies and passenger aviation in 2022.

Hedge funds and other money managers purchased the equivalent of 54 million barrels in the six most important petroleum futures and options contracts in the week to Dec. 28.

Funds have purchased a total of 70 million barrels over the two most recent weeks, after selling 327 million over the previous 10 weeks, according to records published by regulators and exchanges.

Last week’s buying was the fastest since August, and among the most rapid rates for more than a year, signalling a sharp turnaround from previously bearish investor sentiment.

Purchases were split fairly evenly between the establishment of new bullish long positions (+32 million barrels) the closure of previous bearish short ones (-22 million).

The ratio of long to short positions climbed to 4.86:1 (in the 64th percentile for all weeks since 2013) up from 3.83:1 (47th percentile) two weeks earlier.

In the most recent week, funds were major buyers of Brent (+33 million barrels) and NYMEX and ICE WTI (+15 million) with smaller purchases of European gas oil (+7 million).

There were only small purchases of U.S. heating oil (+1 million barrels) and small sales of U.S. gasoline (-2 million).

The pattern of buying, with its concentration on crude and middle distillates, is consistent with a continued upswing in the macroeconomic cycle despite the rapid spread of Omicron.

Funds are calculating the pessimism about the impact on the global recovery and international quarantines that pressured oil prices in November and early December is no longer justified.

Portfolio managers are calculating the continued recovery in oil consumption, including jet fuel, coupled with limited production increases by OPEC, its allies, and U.S. shale firms, will keep prices trending higher in 2022.