(Bloomberg) — Hedge funds retreated from bearish oil bets as rising tension with Iran, OPEC’s second-largest producer, pushed crude to more than $100 a barrel.
The funds and other large speculators increased wagers on rising prices by 2.6 percent in the seven days ended Nov. 29, according to the Commodity Futures Trading Commission’s Commitments of Traders report on Dec. 2. They had cut so-called long positions, bets on rising oil, by the most since August the previous week, the Washington-based CFTC said.
Oil snapped a two-week losing streak as the U.S., U.K., Canada and the European Union targeted Iran’s financial sector and crude exports to deprive it of cash that might be used in nuclear or missile programs. Futures rose 4.3 percent last week, partly on optimism that European leaders are moving closer to resolving the region’s debt crisis.
“Hedge funds were caught flatfooted” by the previous week’s trades, Phil Flynn, a senior market analyst at PFGBest in Chicago, said in a telephone interview on Dec. 2. “They’re scrambling to get back in on the long side.”