‘Hedge Funds Bet Big on Oil’


(c) forbes.com

I don’t understand a great deal of the language in this article published in Oil Industry News on 22nd February 2017 but there are some bits and pieces, along of course with that headline, which I think mean further evidence of confidence in the sector additional to that I described a few days ago in:

North Sea oil and gas is on the crest of a ‘Third Wave’ and the SNP Government is already supporting plans for it’ at: https://thoughtcontrolscotland.com/2017/02/14/north-sea-oil-and-gas-is-on-the-crest-of-a-third-wave-and-the-snp-government-is-already-supporting-plans-for-it/

See this:

Fund managers now have the most bullish view on oil since the first half of 2014, when Libya’s exports were nearly halted by civil war and Islamic State fighters were racing across northern Iraq….Fund managers have been able to increase their bullish bets with almost no disturbance to the market price of crude. Volatility has been most remarkable by its absence.’

Are hedge-fund managers a bit like bookies? They survive because they know what’s happening and what is likely to happen? Oil prices have been steady at $55 per barrel and have stayed there despite the increased investment by hedge-funds. As I understand it from the article, when hedge-fund managers get too bullish then prices often fall but this time they’re holding.

The article goes on to suggest that OPEC has guaranteed prices will not fall below $50 per barrel so that hedge-funds will bet on it:

‘By taking away the downside, OPEC has encouraged hedge funds to bet big on the upside, gambling on the possibility if not the probability that oil prices will rally further as the market rebalances or on some unexpected supply shortfall…Hedge funds have helped OPEC achieve its objective of higher prices since the end of November, while OPEC has reassured fund managers it will not allow them to lose too much money on their trades.’


This comes on top of a very optimistic report from the industry itself at the end of January 2017:

‘Shell bounces back as oil price enjoys a slick resurgence’

Predicting that prices will continue to climb:

‘Royal Dutch Shell is poised to lead a comeback this week as it reveals annual profits have more than doubled on the back of the recovering oil price. The Anglo-Dutch oil giant is expected to post bumper profits of $8.17bn (£6.91bn), a huge jump on the $3.8bn it reported at the depths of the market downturn.’


Any good news for Scotland in this I wonder?


4 thoughts on “‘Hedge Funds Bet Big on Oil’

  1. johnrobertson834 February 24, 2017 / 5:51 pm

    Speymouth, does your site take comments, any idea of your readership? I’m getting mostly 500 – 1000 with the occasional freak 5 000


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