Skip to comments.Hedge Funds Pulled Short Oil Positions Just Before Rebound: Bloomberg
Posted on 01/26/2016 11:49:37 AM PST by Citizen Zed
Computer automated hedge fund strategies weren't the only winners amid recent volatility. Hedge funds also appear to have timed oilâs recent slump and rebound.
That's according to Bloomberg's Moming Zhou, who reportsÂ that hedge fund significantly curbed their bearish positions in crude oil just after it fell to a 12-year low last week -- and then rebounded in its biggest jump since 2008.
While oil had a brutal start to 2016 after a disappointing 2015 showing, many are coming around to the idea of a recovery in prices, as Citi argued it could be the trade of the year, some say the investment opportunity of a generation, and some at the World Economic Forum in Davos argue that the market has to be at a bottom. (In general, consensus is for oil prices to rise by the end of the year and again in 2017, although at a measured pace, likely with volatility throughout.)
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I doubt inflation is about to occur. I think oil specs who were short knew enough to take plenty off the table circa /CL 26-27. Those short were probably put on circa 30, maybe higher. Oil had really dumped violently in that period and shorts know, or learn, that they have to take profits when they are there because oil is so much closer to a bottom than a top.
Additionally, plenty of long interest came into the market from actual users of commodity products. If you are an airline and you have secured $30 oil for the next year (via your futures trading department) and you see 26.50 oil, you almost have to buy more.
Oh, no. By all means, bait-and-switch boss investors, toss another $60 billion into the black hole of oil prices kept low with junk debt. Let’s see how that turns out. I dare ya.
The Fed actually has an inflation goal. It’s like working to ensure money loses value over time. Nuts.
From the standpoint that oil goes back to near where it came from no.
From the standpoint that no other prices have gone down with oil and will surely use the excuse of oil returning to where it was as a reason to raise prices YES, of course. Always happens.
Beef on the hoof is down 20 to 25% this last year. Have you seen that price decrease in the grocery store? No, I didn’t think so. Will you see prices go up if beef on the hoof goes back to where it was? OF COURSE!
How do you like being played? Fun isn’t it?
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