Hedge funds cut bullish oil bets
Fears of worsening European debt crisis curbs fuel demand as global supply rises
New York: Hedge funds cut bullish oil bets by the most in three years the week before the Seaway pipeline begins to ease a stockpile glut, while rising output and concern over Europe's financial woes sent prices tumbling.
Money managers reduced net-long positions, or wagers prices will rise, by 33 per cent in the seven days ended May 8, according to the Commodity Futures Trading Commission's Commitments of Traders report on May 11. It was the largest drop since the week ended April 21, 2009.
Oil declined for two weeks on concern that Eur-ope's sovereign debt crisis will worsen, curbing fuel demand as global supply increases. Saudi Arabian Oil Minister Ali Al Nuaimi said on Sunday that prices should be lower. Rising US production spurred speculation that the shift in the Seaway pipeline from the trading hub at Cushing, Oklahoma, may not be enough to reduce US crude stockpiles from a 22-year high.
Lack of infrastructure
"The production trends globally, with everyone from the Saudis to the US, have combined to push oil lower," John Kilduff, a partner at Again Capital a New York-based hedge fund that focuses on energy, said in a telephone interview. "It could be under $90 [Dh330] by the end of the month, easily."
Futures fell $9.15 a barrel, or 8.6 per cent, to $97.01 during the week covered by the report before sliding to settle at $96.13 on May 11, the lowest since December 19. Oil closed the week below a technical support line along the 200-day moving average of $96.27 a barrel, a signal to traders who base decisions on historical price patterns that the contracts may fall further, according to data compiled by Bloomberg.
Rising output from states including North Dakota, Oklahoma and Colorado has been stranded in storage by a lack of infrastructure to get the fuel to refineries. The Energy Department reported on May 9 that crude supplies in Cushing, the delivery point for the Nymex US benchmark future, swelled to a record 44.1 million barrels.
Saudi Arabia increased output last month to the highest in more than three decades, according to data it provided to Opec.
