Posted on 09/03/2008 6:53:41 PM PDT by TigerLikesRooster
Hedge funds caught out as Hurricane Gustav fails to lift oil price
Miles Costello
Several hedge funds face big financial losses after wrongly predicting that oil and gas prices would rise as a result of Hurricane Gustav slamming into the Gulf coast of the US earlier this week.
As Gustav swept towards New Orleans on Monday, catastrophe experts were predicting insured losses of up to $7 billion (£3.9 billion) as offshore oil rigs faced destruction and the storm threatened energy supplies.
Commodities hedge funds saw the glum prediction as an opportunity, betting heavily, using the futures market, that prices would surge in the wake of the hurricane chaos.
In New York, crude oil leapt to $116 a barrel in the hours before Gustav hit the US coastline. On Nymex, natural gas futures rose 45.3 cents to $8.278 per 1,000 cubic feet. However, the experts, and the hedge funds, were caught out. By the time the storm was sending water lapping over New Orleans’s flood barriers, Gustav had been downgraded by the National Hurricane Centre to a Category 1 event. Oil eased to $105.46, with dealers soon speculating that it would fall to $100.
(Excerpt) Read more at business.timesonline.co.uk ...
Ping!
Ping!
These people just love betting on the misery of the people, about time they get their just reward of going broke like they have tried to do with the resources in this country!
Congress needs to investigate these speculators for excess prof..., oh losses?
All together: awwwwwwwww.
Good, let them choke on the oil price for once.
Smart money, doncha know?
Hedge funds are nothing but a bet. For every winner, there is a looser. Anyone who puts serious money into a hedge fund deserves whatever he gets. To further invest in a hedge that bets on the weather is even more stupid.
Amazing how they make a positive into a negative.
Who cares if the hedge fund lost money.
A little melodramatic? The funds were speculating that resource shortages would affect futures prices, which is what the capital markets are designed to accommodate.
about time they get their just reward of going broke like they have tried to do with the resources in this country!
Tried to make make resources go broke? I thought hedge funds were frequently accused of creating artificial demand leading to a commodity bubble in the first place.
Kinda sucks when your Cat 5 monster gets downgraded to a Cat 2 just before making landfall.
Ya places yer bets and ya takes yer hits.
These hedge funds are no more irresponsible than the lenders giving out 120% mortgages to obviously risky borrowers, in the expectation that housing values would go up 20% a year forever.
Chris Dodd going to bail them out too? With your money?
PS I admit to some small pleasure at seeing these funds taking their hits. Petty I know, but too bad.
Dumbarses.
Iran, Venezuela, and Russia have become dependent on sky high oil prices to make their various mischief. If he price drops down to reasonable levels again, many of their schemes are going to be in deep trouble.
Iran and Venezuela in particular are barely holding on despite the high price. If it drops too low, Nutjob and El Supremo may soon be out of a job.
Good thing Chelsea Clinton doesn’t actually have to do anything to earn her salary or else she might be in big trouble right now.
Wondering where the Algore acolytes work?
I don’t ever want to see another post whining about outlawing “naked” short positions just because you don’t like expensive gas.
This is a clear example of the free market in action. They had an opinion, bet the house on it, and were miserably wrong. If the money people made shorting weak companies isn’t legit, then you better be opening your checkbook to bail out the losses these guys just took.
TANSTAAFL still applies.
couldn’t happen to a nicer bunch of theives. Sooner these $#$%ing things go belly up, the sooner Oil will be back at 35-45 a bbl where it belongs.
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