Oil exchange traded funds are strengthening as the U.S. economic engine gains momentum, with hedge funds raising bullish bets on crude oil to a three-month high.

The United States Oil Fund (NYSEArca: USO) has gained 6.2% over the past month and was up 6.5% over 2013. [ETF Chart of the Day: Oil Plays]

Money managers raised net-long positions, or bullish bets, for West Texas Intermediate crude by 4.4% in the week ended Dec. 24, the fourth consecutive increase and longest streak since July, reports Mark Shenk for Bloomberg.

“There’s a strong demand environment here and that’s attracted the interest of the hedge funds,” John Kilduff, a partner at Again Capital LLC, a hedge fund that focuses on energy, said in the article. “We’ve got a bullish surge going into the end of the year.”

Crude oil has strengthened after the Fed pointed to improved economic growth as a reason for its $10 billion tapering and recent government reports indicating faster-than-expected domestic growth. U.S. GDP expanded an annualized 4.1% in the third quarter, compared to average consensus calls for a 3.6% projected growth.

“There’s been increasing interest from money managers and that flow has been supportive for the market,” Tim Evans, an energy analyst at Citi Futures, said in the article.

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