Oil’s Well That Sends Prices Down Well

Date: Wednesday, August 30, 2006
Author: Dailyii.com

The drill sounds familiar: Hedge funds may hold the key to lower oil prices, or so some say. Crude oil prices have been looking down lately, and one school of market observers suggest that hedge funds, which in the past have been blamed for fueling the outrageous ascent in prices by piling into crude to the tune of $100 billion worldwide, could save the day by helping bring them down. (Subsequent reported investigations eventually exonerated HFs for the most part.) “If hedge funds withdraw money from crude oil,” Deven Choksey of KR Choksey Sec told Moneycontrol.com, “then possibly we will find a drop in crude oil prices in the world market” – maybe to $60 a barrel. One reason for the decline, say mallet watchers, is the current calm reigning in the Middle East. The money, says Choksey, will likely end up in equities -- until the next big thing comes along. Of course, there are naysayers. Among them is investment advisor SP Tulsian, who told Moneycontrol.com that hedge funds are always on the move, form one commodity to the next. “This is their regular feature,” he said. “I don’t see crude falling below $60-65.”