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Hedge Funds Surrender to Oil Rout as Bullish Bets Drop
By Mark Shenk Dec 31, 2014 1:01 AM GMT+0100
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Hedge funds finally pulled back from bets on higher oil prices as the market faces its worst year since 2008.
Speculators reduced their net-long position in West Texas Intermediate for the first time in four weeks, cutting their holdings by 5 percent in the week ended Dec. 23, Commodity Futures Trading Commission data showed yesterday. Long wagers dropped the most since August.
Prices have tumbled to the lowest level in more than five years as U.S. output soared and the Organization of Petroleum Exporting Countries refused to make production cuts. The International Energy Agency and U.S. Energy Information Administration cut their estimates of 2015 global fuel consumption this month amid expectations for slower economic growth outside the U.S.
“The weak physical fundamentals have weighed on the market,” Tim Evans, an energy analyst at Citi Futures Perspective in New York, said by phone. “OPEC’s shift from a policy of supporting prices to one of protecting market share has also had a major impact.”
WTI rose $1.19, or 2.1 percent, to $57.12 a barrel on the New York Mercantile Exchange during the CFTC report period. The U.S. benchmark gained 51 cents, or 1 percent, to $54.12 today, after touching $52.70, the lowest intraday level since May 2009. Brent advanced 2 cents to end the session at $57.90 a barrel, after reaching $56.70, the least since May 2009. The futures have dropped 45 percent this year.
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