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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: SliderOnTheBlack who wrote (52178)	9/30/1999 11:13:00 AM
From: Tomas	Respond to of 95453

Some Hedge Funds Winding Up Oil Positions - Oil Eases As Some Speculators Go For Gold LONDON (Reuters) September 30 - Crude oil took a breather from its upward march Thursday, easing from the 33-month peaks hit the previous day when U.S. industry and government figures showed production cuts biting into oil inventories. Global benchmark Brent blend for November delivery was trading at $23.57 a barrel at 10 a.m. EDT, well down from Wednesday's peak of $24.30 -- a price last seen in January 1997. The high levels proved too tempting for speculators who bought contracts on the way up and some analysts said the recent run-up in gold prices had also apparently forced some hedge funds off the oil futures market. Selling pressure as they pocketed their profits saw the contract creep lower over Thursday morning, after opening more than 20 cents down on London's International Petroleum Exchange. Wednesday's dizzy heights were reached after an American Petroleum Institute report showed crude stocks in the world's biggest oil consumer fell by 3.7 million barrels last week to stand at their lowest levels in almost three years. Oil traders pointed to the falling stocks as proof that OPEC output curbs were biting deep ahead of the northern hemisphere winter. An OPEC ministerial meeting in Vienna last week reaffirmed the producer group's commitment to output limits until at least March next year, keeping their hands firmly on the controls. SOME HEDGE FUNDS WINDING UP OIL POSITIONS While the fundamental picture has driven the recovery in the oil price from sub-$10 lows in February this year, some of the advance has been fuelled by speculators and investment funds. Most analysts believe the upward trend will continue as long as producers stick to their promises -- at least until March 2000 as agreed -- and oil demand increases into the winter. But some say there is evidence that hedge funds are winding up speculative oil positions, as they have done on the bond and equity market because of gold's dramatic price rise. The metal, which hit 30-month highs earlier this week, has held onto a 10 percent gain since European central banks pledged last weekend to curb gold reserve sales and lending. ``...The recent rise in gold prices risks wiping out some of those speculative (oil) positions as rising gold prices undermine the funding conditions of hedge funds,' Chase Securities said in their daily Global Market Brief. Gold had been declining in a long-term downtrend and most hedge funds were selling it short to generate a cash flow which was then used for speculative investment, including positions in the oil market. ``However, the technical position has weakened, suggesting a decline in oil prices and hedge fund liquidation could be the trigger for this move,' Chase said. dailynews.yahoo.com