Tuesday, June 3, 2008

Hedge Funds Cut Oil Bets as Prices Rose, CFTC Probed. And: Pickens Says CFTC Probe of Oil a `Waste of Time'

Two from Bloomberg:

Hedge-fund managers and speculators reduced bets on higher oil prices by 80 percent since July as crude futures rose to records and U.S. regulators started investigating trading, government data show.

So-called speculative net long positions fell to 25,867 contracts on the New York Mercantile Exchange in the week ended May 27 from a record 127,491 on July 31, according to a U.S. Commodity Futures Trading Commission report on May 30.

The decline may complicate the CFTC's probe as regulators try to determine how much of the rise in oil to more than $135 a barrel last month was caused by speculators who may have manipulated the market instead of consumer demand. The CFTC, under pressure from Congress, said May 29 it was investigating the doubling of oil prices the past year and said it will consider giving more detail on the types of oil investors and their holdings.

``The real problem is with passive investors like pension funds and index traders, who do not really qualify as speculators because they're long term'' holders of oil contracts, said Olivier Jakob, managing director of Petromatrix Gmbh, a consulting company in Zug, Switzerland. ``There are no numbers on index traders, that's why the CFTC is going to ask for them and publish them.''

U.S. Treasury Secretary Henry Paulson rejected suggestions that the oil price surge is due to the falling dollar and speculative investment funds....MORE


A U.S. probe into whether speculators manipulated oil prices up to more than $135 a barrel is a ``waste of time,'' billionaire hedge-fund manager Boone Pickens said yesterday.

The Commodity Futures Trading Commission, the watchdog for U.S. commodity transactions, said May 29 that it was investigating how much of the gain in oil prices was caused by manipulation, as opposed to consumer demand. The investigation has been under way since December.

``There's nothing to it to start with,'' Pickens said in interviews at an American Wind Energy Association conference in Houston. ``That's not what's happened. You have 85 million barrels a day of oil available in the global energy market and 86.4 million barrels a day of demand. So the price of oil is going to go up until you can kill demand.''>>>MORE