(John Kemp is a Reuters market analyst. The views expressed are his own)
* Chartbook: http://tmsnrt.rs/2zTiyfa
LONDON, Nov 20 (Reuters) - Hedge funds increased their bullish position in petroleum futures and options to a new record last week, but the first signs of caution started to emerge.
Fund managers raised the number of long positions in the five major futures and options contracts covering Brent, WTI, U.S. gasoline and U.S. heating oil to a record 1.31 billion barrels on Nov. 14.
Minus short positions, portfolio managers held a net long position of 1.12 billion barrels in the five main contracts, which was also a new record, according to regulatory and exchange data.
Fund managers held record net long positions in both gasoline (100 million barrels) and heating oil (72 million barrels), and the position in Brent (538 million barrels) was just 6 million below the record set the week before.
Even in WTI, where portfolio managers have been least bullish, the net position (410 million barrels) was only 34 million below the record set in February.
Benchmark Brent prices have risen almost $20 per barrel since late June, while hedge fund positions in petroleum have increased by 815 million barrels.
But fund managers positioning has become very lopsided over the last four months raising the prospect of a sharp price correction (http://tmsnrt.rs/2zTiyfa).
Hedge funds now hold 6.9 long positions in petroleum for every short position, up from 1.6 at the end of June, and one of the most stretched positions in recent years.
Over the last three years, similar concentrations of long or short positions have generally been followed by a sharp reversal of the previous price trend.
In the current context, fund managers already hold a record number of long positions, which raises questions about their ability and willingness to continue adding to their positions, at least in the short term.
On the short side, there are few bearish positions left to squeeze, with the total number of shorts across the five major contracts already down to just 190 million barrels, from 510 million in June.
Porfolio managers are already becoming cautious towards at least some parts of the petroleum complex amid concerns that prices have risen too far, too fast.
Of the total increase in the net long position (+35 million barrels) most came from WTI (+28 million barrels) with a small contribution from gasoline (+5 million barrels) and a very small one from U.S. heating oil (+2 million).
Fund managers actually cut their net long position in Brent (-6 million barrels) and in European gasoil (-80,000 metric tonnes) in the week to Nov. 14.
Brent futures prices have drifted lower since peaking at more than $64 per barrel on Nov. 6, perhaps an indication that the buying has dried up for now. (Editing by Edmund Blair)