Managers hedge their bets on oil prices - ResearchInChina
Date:2008-06-03
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HEDGE-FUND managers and speculators have reduced bets on higher oil prices by 80 percent since July as crude futures rose to record levels and United States regulators started investigating trading, according to government figures.
The so-called speculative net long positions fell to 25,867 contracts on the New York Mercantile Exchange in the week ending on May 27 from a record 127,491 on July 31, according to a US Commodity Futures Trading Commission report on May 30, Bloomberg News said.
The decline may complicate the CFTC's investigation as regulators try to determine how much of the rise in oil to more than US$135 a barrel last month was caused by speculators who may have manipulated the market instead of consumer demand.
The CFTC, under pressure from Congress, said last Thursday that it was investigating the doubling of oil prices the past year and that it will consider giving more detail on the types of oil investors and their holdings.
Index traders
"The real problem is with passive investors like pension funds and index traders, who do not really qualify as speculators because they're long-term holders of oil contracts," said Olivier Jakob, managing director of Petromatrix Gmbh, a Swiss consulting company. "There are no numbers on index traders, that's why the CFTC is going to ask for them and publish them."
US Treasury Secretary Henry Paulson has rejected suggestions that the oil price surge is due to the falling dollar and speculative investment funds.
"If you look at the facts, they show that the price of oil is about supply and demand," Paulson said.
Unusual fluctuations in cotton prices that disrupted sales by farmers in March are also the target of an investigation by the CFTC. Cotton traded on IntercontinentalExchange Inc's ICE Futures US unit rose to a 12-year high of 92.86 cents a pound on March 5, then fell 26 percent by March 20.
Scrutiny of the oil market increased as Congress held hearings on May 22, and oil soared to a record US$135.09 a barrel the same day.
OPEC president Chakib Khelil blamed record prices on speculation and the declining US dollar.
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