When BTFD Fails: Hedge Funds Say "Enough Is Enough", Start Covering Bullish Crude Bets

Tyler Durden's picture

Having been trained well to BTFD in any and everything, after weeks of picking bottoms, clutching falling knives, and being run over, Bloomberg reports hedge funds finally pulled back from bets on higher oil prices - reducing their net-long position in WTI crude for the first time in four weeks, cutting their holdings by 5% in the week ended Dec. 23. “Traders just said enough is enough,” Phil Flynn, a senior market analyst at the Price Futures Group in Chicago, said by phone. "They were tired of trying to guess the bottom of the market and missing. We don’t have a bottom yet and there’s still a ways to go."

 

As Bloomberg reports,

Speculators reduced their net-long position in West Texas Intermediate crude for the first time in four weeks, cutting their holdings by 5 percent in the week ended Dec. 23, Commodity Futures Trading Commission data showed yesterday. Long wagers dropped the most since August.

 

...

 

“Traders just said enough is enough,” Phil Flynn, a senior market analyst at the Price Futures Group in Chicago, said by phone. “They were tired of trying to guess the bottom of the market and missing. We don’t have a bottom yet and there’s still a ways to go.’”

 

...

 

The net-long position in WTI dropped by 10,784 contracts to 206,939 in the week ended Dec. 23, the report showed. Long positions fell 5.1 percent while shorts decreased 5.6 percent.

 

The report was delayed because of the Christmas holiday last week.

*  *  *

It looks like there is a lot more pain to unwind yet...

 

As we've seen before...

 

Charts: Bloomberg

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Osmium's picture

I wonder if BTFD will ever fail in stawks?

Bossman1967's picture

Lets see obama goes to Saudi in June then oil starts to drop then in december congress is coned by citi bank and obama to insure the derivitives last week obama admits USSA behing the dro in oil prices and they say 14$ a barrel could be the bottom. Now can someone see where we are headed they are using oil to blame the crash since they can not get any country to start ww3 so use this to blame it alll on and have the taxpayer bail out the tbtf banks this time with bailouts. We are here yall Ricketds says 7/1/15 i dont believe there is that much time. So enjoy every day those who have prepared as I have. Fuckem all I say. I am ready to rebuild this country into what it should be.

Bossman1967's picture

Lets see obama goes to Saudi in June then oil starts to drop then in december congress is coned by citi bank and obama to insure the derivitives last week obama admits USSA behing the dro in oil prices and they say 14$ a barrel could be the bottom. Now can someone see where we are headed they are using oil to blame the crash since they can not get any country to start ww3 so use this to blame it alll on and have the taxpayer bail out the tbtf banks this time with bailouts. We are here yall Ricketds says 7/1/15 i dont believe there is that much time. So enjoy every day those who have prepared as I have. Fuckem all I say. I am ready to rebuild this country into what it should be.

Arius's picture

5% ... thats it?  you got to be kidding ... are these people stupid or just muppets?

q99x2's picture

Oil is slippery

Grouchy Marx's picture

It's funny... the one new normal that has not seemed to fail is that every large drop is followed by an incredible rebound bounce. Of course, that pattern holds... until it doesn't.

Then the smart money... is just money. But less.

wrs1's picture

Gold sinks when you drop it in water, oil floats, what does that tell you?

WmMcK's picture

It's wood(en)?  Long ducks.

hairball48's picture

Turds been known to float too

stant's picture

Mason jars and shovels are better idea ?

logicalman's picture

Better off at the track.

You can see what you are betting on.

There are lots of fixes going on, but at least the horses are real.

dirtyfiles's picture

but they see bets in advance so?

Never One Roach's picture

The Loonies are gonna feel some pain, looks like:

 

The Canadian housing bubble makes California real estate look sensible: Crash in energy prices will put pressure on home values up north as Canadians go into maximum leverage.

 

Canada is housing and oil dependent.  And oil just got a big kick to the shins.

It was interesting to hear that we would never see oil drop below $100 a barrel.  Oil is now trading at $52.84 a barrel.  Similar arguments were made about US housing never having one negative year-over-year price drop until we did.

 

http://www.doctorhousingbubble.com/canadian-housing-bubble-canada-real-e...

Carpenter1's picture

I live in Canada, the delusion is beyond comprehension. Even now, with oil crashing, the only Canadians even slightly aware are Albertans, and would you believe even they think it'll pass with little effect?

Canadians are the most deserving of a crash of any nation on the planet.

wrs1's picture

Gold owners deserve to see gold at $20/oz.  Silver was only worth $1.29 for years, seems like that is a reasonable price for it.  If you make $10/hr you are only worth $1/hr, hope you don't mind that either.

sun tzu's picture

I'd love to see gold and silver at those prices. What does that have to do with overpriced Canadian housing? Are you a RE speculator up there?

wrs1's picture

No but I am tired of posters here that revel in the loss of someone else and then add insult to injury with an impliacation that they are stupid to boot.

i_call_you_my_base's picture

I don't understand why you take your losses out on people here. It's odd.

Bill of Rights's picture

Stupid such  as this worthless grievance of yours? No one is forcing you to read the comments.

Fuck Canada.

Bangalore Torpedo's picture
Bangalore Torpedo (not verified) wrs1 Jan 2, 2015 12:16 AM

The only idiot I see posting on this thread is you. Fuck it, let's call .50 per OZ gold and .01 per ounce silver. Why not? You have no effing clue what is going on with the bank credit situation in the West. Perhaps an education for you is in order. Let me recommend: "BANKING AND THE
BUSINESS CYCLE: A Study of the Great Depression in the United States"

A mind is a terrible thing to waste.

Pareto's picture

If the shoe fits.....fucking wear it!  Reality is a bitch.  And just a reminder - It is I among many sir!! who have been subsidizing the extravagant and the profligate through Canada's ZIRP and weak $ policy.  Savers and fixed income have been punished brutally for the benefit of the borrowers and spenders.  Every fucking province in the country is bleeding on their balance sheets with not a thought to the possibility that indeed this time aint any fucking different.  Wax your arrogance some place else.  Time for the market (what little of it is left), to rectify the fucking insanity - and that we do not reward mistakes at the expense of those who did not - you know - let the social welfare function die, so that we can stop playing fucking pretend and return to practical, sustainable and durable resource allocation based on free and unfettered markets - and a real interest rate greater than ZERO!  JFC!  And btw, reveling in the loss of someone else occurs only when that someone else actually owned what they lost.  Those that lose here will be those who owed more than their networth would (under normal interest rates) allow.  In which case, they never lost anything.  End of story.

Pareto's picture

If gold were to return to $20/oz that would mean the price for gas would be about 25 cents/gallon, ciggarrettes 15 cents per pack, and a pop and a chocolate bar a nickel a piece.  Its all relative my friend - you don't think gold is going to move to $20 all by itself do ya?  Say it aint so!!  Tell me thats not what you're saying - that instead you're saying something completely different and you got your fucking words mixed up.   Because if you are really saying that only one side of the coin is worth looking at, then what you are really saying is that you don't understand the difference between real and nominal values - that you do not understand that price is a monetary phenomenon and that you do not understand the effects of price fixing the only price mechanism that really matters - interest rates - its effects on the dislocation of capital and the dilution of collateral.  Please.  Say it aint so.

garypaul's picture

Actually it would have been good comeuppance if Candian real estate had crashed along with American a few years ago. Now it's going to be sad and scary as a lot of people get hurt badly.

CanadaFrank32's picture

Loonies is already getting pounded and once the oil companies start shedding weight...

pitz's picture

Canadian deflation should be profoundly supportive of the Canadian dollar. 

disabledvet's picture

With the near collapse of Russia's economy last month Putin might feel compelled to attack. So far our President has never issued a stand down order or any other type of ultimatum...although certainly we have seen "phone call pictures."

If it looks like sanctions are having the "desired effect" how is one to argue that Russia doesn't have a right to respond? Putin can claim national interest can he not?

Assad just showed up with the troops in Damascus.

That sounds to me like a prelude to something.

Maybe someone should...you know, say something? "Before Warsaw gets wiped off the map"?

monkeyshine's picture

Anyone remember why Japan bombed Pearl Harbor?  I am uncertain of all Putin's motives but Japan could have simply invaded Brunei and Malaysia to break the blockade instead of bombing Pearl Harbor and avoided war with the USA.  Would the USA have gone to war to defend Brunei and Malaysia in 1941? Probably not. Putin should understand there is no need for direct conflict with industrial powers and do what Japan should have done. The question is what does Russia need now other than higher oil prices?  Though conflict could drive economic output its the wrong move now.  Like most they need a more diverse economy and a way to make the sanctions ineffective. Tough situation for Putin but my guess is his path of least resistance is towards (but not into) Turkey. Support Turkey's push for Kurdish independence in Northern Iraq (Edrogan wants ethnic Kurds out of his hair) and support Turkey's claims against Cyprus and eastern Med oil and gas.  Meanwhile Saudi Arabia is settling scores. They are the ones behind most of this  and their ploy targets Russia for supporting Syria, Iran for the bomb, against the US for being weak with Iran and supporting "Arab Spring" among others. Canada may just be an unintended victim. Will KSA continue this course if Abdullah dies soon?  Could be the linchpin in this all which may be why he isn't visiting any foreign hospitals.

magnetosphere's picture

isn't there a short for every long in the futures market? so if hedge funds decreased longs by 5% then someone else decreased shorts by 5%?

wrs1's picture

I believe that is exacty what the article said.  That usually means the shorts outlasted the longs, neither had shit to buy or sell, just made bets on the price.  

Latitude25's picture

Covering bullish bets?  How about fucking naked shorting the crude markets with thousands of contracts in a millisecond.  Sound familiar?

NoDebt's picture

Douse it in gasoline and burn it down.  About time for some reality.  As much as I hated to see gold drop from $1900 to $1200, I'd love to see something similar happen to crude oil.  Flattening out around $55/bbl after a dip to $40 and unable to gain traction for YEARS above that point would suit me (and a lot of other people) just fine.

 

Paracelsus's picture

I  am not an engineer,but I have always felt that the Tar Sands would only be economical with high oil prices,and gov't subsidy.

Lessee:  the Canucks go to Mideast to prop up feudal monarchy that whips women for driving a car (Gulf war 1 and 2).

Saudi gov't kicks the crap out of the Canadian economy by allowing oil to free fall.

"Thank you Canadian veterans for getting shot to bits on our behalf". 

You just can't make this shit up....

Soul Glow's picture

Thus they took a loss.  A big, big loss.  That won't report well for Q1.  Just sayin'....

Salzburg1756's picture

"Gold sinks when you drop it in water, oil floats, what does that tell you?"

 I'm pooping gold?

theyjustcantstop's picture

I seen commented, the fed. is using oil now, because they can't get anyone to start ww111 for them.

there's a reason for that, because if the country starting the false-flag, survived the blast, the huge destructive shock-wave, the incinerating heat, and out-right radiation melting, their citizens, (or what is left of them), may be pissed.

I always wonder how many grubers, does the mic, cia, and Israel have in a room figuring out what would it take for them to go nuclear?

would Israel go nuclear if Iran disappeared Riyadh, then stood down, or would america go nuclear, if china, sunk japan, then stood down, would nato go nuclear, if Russia, prepared the ground in Poland, for a pipe-line, and then stood down?

would the next g-20 meeting not be all about global-warming?

 

Herdee's picture

Harper will ruin western Canada's economy and he sided with neo-nazis in the Ukraine supported by far right wing elements in The U.S. State Department.Harper is a national disgrace to a peace loving country that has become a simple pawn in failed U.S. foreign poilicy under Obama.It's still a secret government policy which refuses to disclose how much was spent in Afghanistan on a failed mission there that helped back U.S. Intelligence Operations tied up in controlling and dealing opium.

http://www.globalresearch.ca/drug-war-american-troops-are-protecting-afg...

http://www.globalresearch.ca/money-laundering-and-the-global-drug-trade-...

Wahooo's picture

And there's your bottom.

Fuku Ben's picture

The how low can you go limbo continues

This is a great example of why those hedge funds returns last year suck. They couldn't call a bottom if a porn star was bent over in front of them tell them to fuck her in the ass

The obvious pirate squeeze on the intended victims isn't having the expected results. Trend says down for the foreseeable future. How fast, how hard and how long is what the porn star, a smart hedger and inquiring minds wants to know

My bets are that Putin can outwit, outlast and outplay his globalist criminal faction opponents. And I'm betting they realize this this too. But their egos won't let them admit it to themselves especially since the military is involved in this scenario. These greedy whiny bitch oil f8cks don't want to take a profit hit too long or too hard. Not because they give a shit about investors they care about their personal losses and increased risks of losing their jobs

-So 10-15 days to finish the quarterlies and annuals
-Drop the price after
-Assess impact over the next 60-75 days of the next quarter -Reassess, rinse and repeat if necessary. Profit reduction/loss sustainability max 2 more quarters
- Price Est. $35-50 or 8.8 * $4-6 est. actual production costs per barrel (Next Blood Moon is April 4, 2015 (4+4)(2+0+1+5) & the Saudi Royalty ain't Arabs or Muslims so that date is very important to them

We'll find out the actual current SA cost soon since they're calling the shots. I don't believe it is there yet and I'm betting they'll push it to the minimum soon

Since the last crash it went to about $43.50 that should be close again this time except they're doing it for a different purpose

If any of you bitches make any money by following this assessment you better pony up some fiat and donate it to a charity of my choice

Wild E Coyote's picture

When someone makes contract that gets registered with Platts, that price becomes part of the calculation for "market price".

And every time Platts releases the calculated "Platts price", most others all around the world follow it when setting up contracts.

Thus all you need is some people who do not follow the Platts Price and sets a new price up or down. Who do you think it is? 

In theory anyone with support a a respectable Bank could try push prices up or down. But whoever has the deepest pockets will win.

Who do you think have the deepest pockets and ability to get bailouts?

It is China and India which are the biggest enemies of this game. they do not follow market prices.They have been entering into various countries and buy commodities at discount by "investments" into the mining and oil and gas industry. US is alreaady losing this game. 

Russia has been adding to this fire by making deals with China for prices below Platts price. 

Even friendly countries like Indonesia are beginning to question the logic of buying petroleum products at higher price from US dollar based oil thru Singapore. 

The problem is clear. Everyone hopes to avoid using US dollars and thereby reduce their costs for purchasing oil. 

Oh.. Yes, US is willing to issue more US dollars. But as loan with high interest citing country risk etc. And it also implements various controls and machanism in place to get those US dollar loans. The US system is losing its value. The world does not really appreciate the security provided by US financial system. It was considered easy money during the early days of this US financing. With the big 5 Auditing companies massaging the numbers to issue loans at higher and higher volumes. Just like the subprime loan scheme.

Today, it is considered as the high cost "loan shark" type loan by the world. Everyone avoids it. 

 

 

 

 

 

Pareto's picture

"The FED can change what things look like, but, the FED can never change what things really are" (James Grant, 2013) - and don't you ZH'ers even think of asking me to quit posting this becauase the more I see of this -http://www.fortmcmurraytoday.com/2015/01/01/civeo-closes-two-lodges-nort..., the more relevant and powerful this statement becomes.

SmokinMonkey's picture

Day Traders didn't want to hold their oil contracts over the holiday period so net contracts fell by 5%.  Why is this even news.