Hedge Funds Turning Into OPEC Skeptics

Oil investors are growing more doubtful that OPEC can seal a deal.

Money managers reduced bets on higher oil prices by the most since July 2014 after the group failed to agree on country quotas in talks on Oct. 28 in Vienna. The rally following the Organization of Petroleum Exporting Countries’ preliminary deal in late September has disappeared as questions mount about whether OPEC can implement the first supply cuts in eight years at its Nov. 30 summit, Bloomberg reported.

“The market has gone from taking OPEC’s pledge at face value to questioning whether they will be able to come to any agreement at all,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York.

In addition to cutting long positions in West Texas Intermediate in the week ended Nov. 1, money managers increased their short positions, or wagers that prices will fall, Commodity Futures Trading Commission data show. The resulting net-long position decreased 13%.

While Goldman Sachs Group Inc. sees little probability of a deal at the Nov. 30 meeting, Bank of America Merrill Lynch and Citigroup Inc. say an accord is likely.