for Hedge funds
By manipulating sentiment through both verbal intervention and physical supply cuts, OPEC members have effectively used speculative money in the futures markets to their advantage.
Although the world is still in the midst of a seemingly perpetual glut, does a supply gap loom? Is peak oil demand imminent? Why is OPEC praising shale and meeting with hedge funds?
The growing confidence among hedge funds for higher prices and the expectation of a tighter market during the second half of the year make it more likely than not OPEC will continue to manipulate output.
If fundamentals weaken and oil market sentiment shifts, a sharp price correction is likely once investors liquidate their long positions.
Hedge fund sentiment in the oil markets has turned considerably bearish as of late. While it may be premature to say prices have already peaked for the year, a sustained bull run for the rest of 2016 appears less and less likely.
Whether the current rally has staying power is up in the air, but overall fundamentals suggest otherwise, despite recent ambiguous headlines that have been interpreted as supportive. The rebound has been largely technical in nature, with hedge fund positions exaggerating the price move upward.
2015 has been a roller coaster for energy and oil markets. We break down the most critical developments of the year.
Hedge funds have taken hits from lackluster equities and a big shake-up in commodities. The string of fund closures could be a harbinger of deeper structural issues in the economy.