Hedge funds go for oil

HEDGE funds investing in oil are luring capital at the fastest pace in more than a year.

  • Staff Reporter
  • 27 April 2018
  • 04:56
  • News
Hedge funds go for oil

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News agency Bloomberg reports that with crude climbing to levels not seen since 2014, commodity funds have recovered the client outflows they suffered last year.
 
And if firms such as Westbeck Capital Management and Commodities World Capital are correct about prices soon exceeding $80 per barrel from about $68 currently, then the jump in allocations may just the beginning.
 
Until last Friday, everything seemed to point to oil extending its gains, with confidence in the global economy building and geopolitical tensions and production shortages showing no signs of going away.
 
Then US President Donald Trump criticised OPEC on Twitter, saying prices were artificially high and would not be accepted. Prices slipped 19c/bbl, Bloomberg reported.
 
Still, these funds are "desirable in times of expected market volatility" and will probably continue to draw inflows in 2018, said Peter Laurelli, global head of research at data provider eVestment.
 
Investors allocated $3 billion to commodity-focused hedge funds from January through March, the most since the third quarter of 2016, according to eVestment. Last year they pulled $680 million from the strategy in the first net outflows since 2014.
 
The WTI crude oil price was slightly up overnight at $68.20 per barrel.
 
Overnight, the gold price was fixed at $1319.68 an ounce.
 
In softer commodities, cocoa decreased $34 per tonne or  1.19% to $2822/t yesterday from the $2856 in the previous trading session, tradingeconomics.com reported. Historically, cocoa reached an all-time high of $4361.58/t in July of 1977 and a record low of $211/t in July of 1965.
 
Coffee increased 0.75c per pound or 0.64% to 117.60c/lb yesterday from 116.85c/lb in the previous trading session, tradingeconomics.com reported. Historically, coffee reached an all-time high of 339.86c/lb in April of 1977 and a record low of 42.50c/lb in October of 2001.
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