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Benedicte Gravrand, Opalesque Geneva:
Markets are scared by the recent drops in oil prices; the Greek debt crisis (and the euro still falling); China’s inflation (though Chinese Premier Wen Jiabao has just declared efforts to stop it have worked); and the Middle-Eastern uprisings. To own oil, one must believe that the global economy is stable or growing. Investors who stop believing it will sell oil like they sell stocks. So as oil went down drastically last month, some funds – who sold their holdings then - did poorly as a result.
During the first week of May 2011, Brent crude traded at its highest volume ever, as investors, many of them hedge funds, liquidated their positions in order to reduce risks, reported the FT. Brent and WTI spot prices had dropped, and fell by a total of around 12% and 8.3% respectively by month end.
Clive Capital’s main fund dropped 8.9% ($400m) that first week of May; Blenheim Capital’s flagship fund lost 5.7%; Sprott Asset Management’s main hedge fund was down 12%; and Astenbeck Capital lost 12%. BlueGold Capital Management, a $2.4bn London-based hedge-fund firm, reportedly was down by about 20%, or nearly $500m (remember in ...................... To view our full article Click here
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