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Jim Hyerczyk

Jim Hyerczyk

Fundamental and technical analyst with 30 years experience.

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Did Hedge Funds Just Change The Way They Trade Oil?

Trading

Crude oil, unleaded gasoline and natural gas posted mixed results this week as volatility returned to the markets. Crude and gasoline were under pressure, while natural gas was set to move higher. Both moves were surprising because crude and gasoline momentum was trending high before abruptly turning lower and natural gas was pressing multi-month lows before making a miraculous turnaround.

The sell-off in crude oil was particularly interesting because, in my opinion, it represented a change in the trading style of the hedge funds. Having been burned several times this year aggressively playing the long side in the hopes of bullish news, this week, it looked as if hedge funds balked at a chance at buying strength that could’ve sent the market to a multi-month high.

Perhaps it was nervousness over the geopolitical events, or perhaps it was a change in their trading style to book a profit at the first sight of potentially bearish data. Whatever the reason behind the hedge fund selling, it now looks as if they are being more careful and likely to seek value for their next bullish play rather than try to take out resistance.

Crude Oil Analysis

The news was mixed all week, but crude oil buyers were able to overcome some of the bearish data to mount an assault on the early August high. However, surprise news on Thursday appears to be just too much for buyers take.

U.S. West Texas Intermediate posted a potentially bearish closing price reversal…

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