Tags: hedge fund | oil | OPEC | futures

Hedge Funds Raised Bullish Brent Oil Bets Before OPEC Price Drop

Monday, 01 Dec 2014 08:39 AM

Hedge funds and other financial traders increased bullish bets on Brent crude in the days before OPEC’s refusal to cut production sparked the biggest price slump in three years.

Money managers’ net wagers on rising prices rose 7.9 percent to 65,973 contracts in the week ended Nov. 25, according to figures from the ICE Futures Europe exchange. Brent collapsed as much as 8.4 percent two days later, the steepest drop since May 2011, when the Organization of Petroleum Exporting Countries resolved to keep its production target unchanged.

OPEC’s decision to maintain output signaled it will let U.S. and other producers curb supplies first in response to a global surplus. Brent slumped as low as $71.25 a barrel on the day of the meeting and has subsequently extended losses.

“A week is a long time in these markets,” Ole Sloth Hansen, an analyst at Saxo Bank A/S in Copenhagen, said by e- mail. “Last Tuesday the consensus was building that an OPEC cut would be seen, and new longs were attracted to this outlook, only to be hit hard a couple of days later.”

Producers, consumers and end users of crude became more bearish in the period covered by ICE’s Commitments of Traders report. They extended their net-short position, or bets on falling prices, by 3.2 percent to 324,393 contracts.

Brent futures slipped 0.2 percent in the week covered by the data, settling on Nov. 25 at $78.33 a barrel. Prices have since plunged below $70, falling to a five-year low today of $67.53 a barrel.

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Hedge funds and other financial traders increased bullish bets on Brent crude in the days before OPEC's refusal to cut production sparked the biggest price slump in three years.
hedge fund, oil, OPEC, futures
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2014-39-01
Monday, 01 Dec 2014 08:39 AM
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