WEST PALM BEACH, FL (HEDGECO.NET) – Oil prices have declined further from the all time peak of $55.67 reached on October 25, 2004. Energy analysts said hedge funds are exiting from the oil marketsfor now, in part due to easing concerns about oil inventory levels during this winter. US light crude recently traded at $49.09, about $6 lower than the peak prices.
Stockpiles of US crude and natural gas have increased and there is now a growing confidence that there may be enough supplies to meet up with the demands resulting from a harsh winter. Even new reports of fresh trade disputes and possible strike by the Nigerian oil workers did not stop oil prices from declining.
Heavy buying by hedge funds has helped to lift oil prices up in the oil exchanges. However there is no agreement whether hedge funds alone are responsible for such drastic increases in oil prices. Some market analysts think hedge funds are merely taking advantage of market inefficiencies where they exist.
There is also another factor contributing to declining oil prices, Frederic Lasserre of SG bank in Paris said, “U.S. economic statistics have foreshadowed further increases in Fed Funds rates, encouraging the macro funds to reallocate their portfolios, with a higher preference for stocks.� Meanwhile some hedge funds may have shifted attention to other markets, such as currencies; recently the US dollar fell to a new record low against the euro.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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