LONDON (Reuters) - Hedge funds purchased more petroleum futures and options last week, but the rate of buying remained cautious as positions become stretched and upward momentum on prices has stalled for the time being. Hedge funds and other money managers purchased the equivalent of 24 million barrels in the six most important petroleum futures and options contracts in the week to Jan. 26. (Chartbook: tmsnrt.rs/3cubvwp) Portfolio managers have been buyers for 11 weeks running, increasing their holdings by a total of 490 million barrels, according to records published by ICE Futures Europe and the U.S. Commodity Futures Trading Commission. Total holdings are now the equivalent of 847 million barrels, which puts them in the 79th percentile for all weeks since the start of 2013, up from just 356 million at the beginning of November, which was in 15th percentile. In the most recent week, funds purchased Brent (+24 million) and small quantities of U.S. gasoline (+5 million) and U.S. diesel (+6 million), but sold NYMEX and ICE WTI (-10 million) and European gas oil (-1 million). From a fundamental perspective, the balance of price risks is tilted towards the upside, which probably explains the continued buying trend from the investment community. Global inventories of crude and especially products are shrinking as OPEC+ restricts production and refiners limit crude processing to work down excess stocks accumulated during the second quarter of 2020. But the slow roll out of vaccination programmes in most countries threatens to limit international passenger aviation much longer than expected at the end of last year, which will act as a drag on oil consumption. And higher prices are already encouraging an uptick in oil drilling in the United States as well as undermining cohesion within OPEC+, which will increase production later in the year. If prices continue rising towards $60 or even $65, there will be an even stronger response from U.S. shale producers and OPEC+; the U.S. oil rig count has already risen by 123 over the last five months. Front-month Brent futures prices have been flat for the last three weeks, after rising strongly during much of November and December, suggesting the earlier rally has run out of steam. From a positioning perspective, the concentration of fund positions on the bullish side implies downside risks from future long liquidation likely outweigh upside risks from short covering or further position-building. Front-month Brent futures prices are trading close to the $55-60 per barrel range most market observers think will be the average this year. Overall, the slight bias to the upside from tightening fundamentals is offset by a slight bias to the downside from positions already accumulated, consistent with the lack of strong price moves since the second week of January. John Kemp is a Reuters market analyst. The views expressed are his own. Related columns: - Oil market on track to rebalance around mid-2021 (Reuters, Jan. 29) - Oil buying fades as risks shift to downside (Reuters, Jan. 25) - Hedge fund positions in crude, gasoline start to look stretched (Reuters, Jan. 18) - Rapid oil price rise divides fund managers (Reuters, Jan. 11)