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Knife-Catching Hedge Fund Oil Bulls Dump Crude At Fastest Pace In 3 Years

Tyler Durden's picture




 

Hedge Funds' net long position in WTI Crude collapsed 27% (the biggest single 'dump' in over 3 years) ahead of the big plunge last week (and is now down almost 60% in the last month - the most since 2010). Part of a broader deflationary collapse in commodities, as Bloomberg reports, long positions dropped to a two-year low while short holdings climbed 25%, erasing more than $100 billion in market value from the 61 companies in the Bloomberg E&P stock index. With crude supplies still almost 100 million barrels above the five-year average, "there's a lot more room for prices to slide," warned one trader, "it's going to take a long time for this to work itself out."

 

Speculators’ conviction that oil will rally weakened at the fastest pace in three years, just before futures tumbled into a bear market.

As Bloomberg details, the net-long position in West Texas Intermediate contracted 28 percent in the seven days ended July 21, U.S. Commodity Futures Trading Commission data show. Long positions dropped to a two-year low while short holdings climbed 25 percent.

 

Hedge Funds dumped their spec longs en masse...

 

“Supply is still in excess of what would balance the market,” Katherine Spector, a commodities strategist at CIBC World Markets Inc. in New York, said by phone July 24. “We see the global balance improving in the second half of this year and in 2016 but it hasn’t happened yet.”

 

“The Saudis are pursuing their interests,” Sarah Emerson, managing principal of ESAI Energy Inc., a consulting company in Wakefield, Massachusetts, said by phone July 24. “The Saudis see the U.S., Iraq and Iran raising production and aren’t going to lose market share.”

As we noted previously, there’s a chance that the downturn in the world’s oil industry may be more severe than in 1986, when business endured the deepest slump in 45 years, according to Morgan Stanley.

The global oil market is seen coming into balance in the second half of 2017 at the earliest if OPEC continues pumping crude at present levels and U.S. output remains flat, Deutsche Bank strategist Michael Hsueh said in a report last week. Hsueh said that equilibrium is more likely in 2018.

“There’s a lot more room for prices to slide,” Emerson said. “It’s going to take a long time for this to work itself out.”

 

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Mon, 07/27/2015 - 14:55 | 6359868 Winston Churchill
Winston Churchill's picture

$22tn in oil derivatives.

Tick tock.

Mon, 07/27/2015 - 15:00 | 6359886 johnvallo
johnvallo's picture

BTFOHSHIT

Mon, 07/27/2015 - 15:03 | 6359898 kaiserhoff
kaiserhoff's picture

WTI down another $.80/barrel, as we speak.

Mon, 07/27/2015 - 16:06 | 6360124 KnuckleDragger-X
KnuckleDragger-X's picture

This is just the beginning of the fallout from the ZIRP of doom.The FED zeroed interest rates and threw huge wads of cash at the markets and here we are, standing at the gates of hell commenting on how "it's a dry heat". There is a lot of shit that has been done in the name of free money and we even exported it to the EM's so they can go down in flames too...

Mon, 07/27/2015 - 14:58 | 6359877 saints51
saints51's picture

Whats Goldman's take on this issue? Best contrarian indicator ever!!!!

Mon, 07/27/2015 - 15:19 | 6359968 Rainman
Rainman's picture

yes .... need an update...their last  call for $39 shot it up to $60

Mon, 07/27/2015 - 15:49 | 6360074 saints51
saints51's picture

Glad to see you and lumberjack remember. So many on this site do not realize how valuable that little tidbit of info can be with a solid trading plan.

Mon, 07/27/2015 - 15:31 | 6360009 Lumberjack
Lumberjack's picture

Had to do this... /s

 

 6h

6 hours ago

Jim Cramer retweeted Rusty

Oh you will know. The stocks will stop going down every single day.

Jim Cramer added,


This am you mentioned oil may find a new bottom. If so, when is it time to buy quality oil stocks. Now or wait
Mon, 07/27/2015 - 14:59 | 6359878 Tallest Skil
Tallest Skil's picture

?? It all returns to nothing; it all comes tumbling down, tumbling down, tumbling down... ??

 

EDIT: Aww, you don't let people use unicode musical notes? Come on.

Mon, 07/27/2015 - 14:59 | 6359880 The Bell Rang
The Bell Rang's picture

Damn, might be able to buy a stripper well in a year or so....

 

Mon, 07/27/2015 - 15:15 | 6359943 CrazyCooter
CrazyCooter's picture

I remember when I was a kid we had some notched rail road ties that held drill string pipe stacked four or five ties high. That shit is bad ass. Don't know what my old man paid for it, but I would bet my ass it wasn't much. He built all kinds of shit out of it (think framing for car ports, shit like that). He made a bumper for an old land cruiser as well with a warren winch and some ammo boxes monted on it - had to add a leaf spring to the front.

Lots of deals to be had when all this shit goes tits up!

Regards,

Cooter

Mon, 07/27/2015 - 15:00 | 6359884 JustObserving
JustObserving's picture
Oil Bulls Dump Crude At Fastest Pace In 3 Years

They are always wrong

 

You Picked a Fine Time to Leave Me Lucille

You picked a fine time to leave me Lucille
With four hungry children
And a crop in the field
I've had some bad times
Lived through some sad times
But this time your hurtin' won't heal
You picked a fine time to leave me Lucille

https://www.youtube.com/watch?v=1GVr1l7Xbko

Mon, 07/27/2015 - 15:01 | 6359887 wmbz
wmbz's picture

“We see the global balance improving in the second half of this year and in 2016 but it hasn’t happened yet.” ~Katherine Spector

These "experts" just write down any old shit they feel like! She said nothing!

Mon, 07/27/2015 - 15:01 | 6359891 Bill of Rights
Bill of Rights's picture
IMF says ECB may need to extend money-printing to get euro zone moving

http://www.cnbc.com/2015/07/27/reuters-america-imf-says-ecb-may-need-to-...

 

http://i.imgur.com/JYAVWj7.gif

Mon, 07/27/2015 - 15:54 | 6360087 Nobody For President
Nobody For President's picture

Great image - a keeper!

Mon, 07/27/2015 - 15:08 | 6359922 wstrub
wstrub's picture

The powers that be justifying historically low interest rates with delfationary collapse.  Sure!

Mon, 07/27/2015 - 15:18 | 6359948 kevinearick
kevinearick's picture

Religion, politics and science have always been aimed at replacing marriage as the building block of economics, with a majority seeking something for nothing and hiring scapegoats as the proffered 1%, in a bait and swap, to trap the leading edge in the actuarial ponzi, failing every time, but that doesn't tell you how to project your DNA into the future, for the required NPV. Basic math tells you that 4+ children are required per family for growth, which no nation/state is sustainably producing.

All the Fed has is RE inflation, falling living standards for anyone silly enough to think that work pays within an empire. Whether you join or rebel, in the rigged lottery, you lose. Check the arbitrary price of education, real estate and healthcare, passive investment, relative to wages. Betting on Qualcomm and Amazon beats betting on the Fed, for now, because the Fed must prop them up. It's always a new world order, same as the old world order. If you take a look at University Law from the beginning, you will see that it is simply an extension of Family Law. Pick any piece of moron paper and work 10% of the time to get 2X rent.

Casual observation tells you that the demographic numbers being provided are well above reality. Where are the kids? Who is buying all the crap? What is the disposal rate? Where are they getting the credit?

Politics is a function of the global cities extracting extortion at the ports, in both directions, surprise. Vote Hillary; solar will save everyone, by shorting the sun/solar system...crack me up.

Mon, 07/27/2015 - 15:19 | 6359964 Spungo
Spungo's picture

Hedge funds = new contrarian indicator?

Mon, 07/27/2015 - 15:24 | 6359985 wrs1
wrs1's picture

GOR, GOR, GOR,  look at gold drop, can't keep it's pants up.  Gold is headed for $500, the miners are telling you that as well as oil.  With oil at these levels, miner profits should be much higher but the message today in GG for example is that earnings on Thursday are going to be horrible because even with low oil prices for the last 8 months, miners are still losing money.  Gold at $1300 might have been profitable but instead, gold has collapsed below $1100 and looks to have a lot more to go.

Mon, 07/27/2015 - 15:29 | 6360004 greatbeard
greatbeard's picture

Every thread is a gold bashing thread now.  Gold threads are a free for all.  Where's the love?

Mon, 07/27/2015 - 15:42 | 6360053 Winston Churchill
Winston Churchill's picture

The haters are the weak hands that sold.Just like ex smokers who are the worst

about second hand smoke.

Mon, 07/27/2015 - 15:54 | 6360089 wrs1
wrs1's picture

It's not a gold bashing thread, it's a reminder that if oil goes down, gold has no support with the GOR at these nosebleed levels.  GOR was over 20 in 1980, what happened to both oil and gold over then next few years?  Hedge funds are net short gold and dumping oil.  What does that tell you?  

Mon, 07/27/2015 - 15:53 | 6360084 i_call_you_my_base
i_call_you_my_base's picture

C'mon man, some of us remember that you're financially into oil.

Mon, 07/27/2015 - 15:55 | 6360091 wrs1
wrs1's picture

I own gold too.

Mon, 07/27/2015 - 15:31 | 6360005 stocks up every...
stocks up everything else down's picture

How can this be happening?  Our central banksters said they are fighting the evil, horrible, terrible, end of the world deflation.  Could it be the central banksters aren't the omnipotent gods they think they are?

 

I for one can't wait to pay less for the things I need.  So queen Yellen stick that up Draghi's Greece'ed cunt and enjoy.

Mon, 07/27/2015 - 15:31 | 6360010 The Duke of New...
The Duke of New York A No.1's picture

Dear Federal Reserve: Please raise interest rates - investors need a good bitch slapping.

Mon, 07/27/2015 - 15:44 | 6360056 Handful of Dust
Handful of Dust's picture

Putin has to be squirming right now. If a few dozen more shale companies and american drillers go belly up laying off hundreds of thousands of engineers, Barry will have Putin right where he wants him.

Mon, 07/27/2015 - 15:45 | 6360064 lbrecken
lbrecken's picture

Tyler for once do some real work..this guy has and even if he is half right prd by easy math will fall some 400B/D so 100MB oversupply one does not account for this nor does the price of rigged oil.....further the supply you preach does not account for the highest level of demand in 5 years yet you and every other dummy compare absolute inv to 5 year averages.....http://www.oilvoice.com/n/US-Shale-Oil-drilling-productivity-and-decline...

Mon, 07/27/2015 - 15:51 | 6360078 falak pema
falak pema's picture

What happened to Hamm, the king of shale?

Mon, 07/27/2015 - 17:51 | 6360522 falga
falga's picture

They finally understood that fracking technology not only makes the US production figures look miraculous but it also makes the rest of the world's potential equally explosive.  Technology has essentially doubled crude oil supplies and the market has finally figured it out!

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