Hedge funds cut bullish bets on oil last week by the most in two months before political protests erupted in Egypt, igniting a rally that sent prices up by the most since 2009.
The funds and other large speculators reduced net-long positions, or wagers on rising oil prices, by 18 percent in the seven days ended Jan. 25, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report. That turned into a losing bet as prices surged at the end of the week.
Oil jumped 4.3 percent Jan. 28, erasing the week’s losses, as protesters called for the end of the 30-year rule of President Hosni Mubarak, sparking speculation of more turmoil in the region. The volume of oil futures soared to a record in electronic trading on the New York Mercantile Exchange. Shares in the $1.8 billion U.S. Oil Fund, the largest exchange-traded fund in the fuel, hit an eight-month high.
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