Hedge funds last week sold off stocks of energy companies at the quickest pace in 10 months as oil prices slumped following the announcement of a ceasefire in the 12-day Iran-Israel war.
The selling was seen across the board in energy stocks in every region, Goldman Sachs analysts wrote in a note to clients carried by Reuters. Last week’s selloff was at the fastest pace since September 2024 and at the second-fastest pace in ten years, according to the U.S. investment bank.
The heaviest selloff was focused on the North American and European energy stocks, as hedge funds boosted their shorts and fled the long positions, especially in European energy companies, Goldman Sachs noted.
Despite the rise in short positions, the total combined position of hedge funds remains long on energy stocks globally, according the bank’s analysis.
Oil prices soared early this month after Israel hit Iranian nuclear sites and military leadership in coordinated attacks. The two weeks that followed rattled investors and speculators as the market feared a disruption to oil and gas supply from the Middle East.
However, the ceasefire announced by U.S. President Donald Trump early last week sent oil prices tumbling and returning to the $60s per barrel handle as the dialing down of the tensions eased concerns about supply disruptions, including the mother of all disruptions—a potential attempt by Iran to close the Strait of Hormuz, which every day handles crude flows equivalent to more than a fifth of global daily oil consumption.
Crude oil took the biggest hit among commodities in last week’s selloff, with WTI and Brent futures tumbling 12%, Ole Hansen, Head of Commodity Strategy at Saxo Bank, said on Monday in a weekly commentary of the commitment of traders.
Trend-following funds and managed money accounts unloaded last week 95,500 crude oil contracts—wiping out more than half of the previous three weeks’ buildup, Hansen said. Brent Crude was the most heavily sold, with the net long position – the difference between bullish and bearish bets – slashed by 29%.
By Tsvetana Paraskova for Oilprice.com
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