Hedge funds' bullish bets on commodities down most in 6 weeks

Fri Jun 7, 2013 6:10pm EDT

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* Net long position held by money managers down $680 million

* Bulk of drop caused by managers dumping oil, gas positions

By Barani Krishnan

NEW YORK, June 7 (Reuters) - The bullish money held by hedge funds and other big speculators in U.S. commodities has fallen by its most since late April, trade data showed on Friday, as they dumped large positions in oil and natural gas on concerns about the economy and demand.

The net-long money held by money managers in 24 commodity markets tracked by the U.S. Commodity and Futures Trading Commission fell by about $680 million to about $67 billion for the week ended June 4.

That was the sharpest tumble in managed money on those markets since the week ended April 23, when some $4.2 billion exited, according to CFTC data calculated by Reuters.

Futures of U.S. crude oil traded on the New York Mercantile Exchange witnessed a net drop of about $504 million in managed money during the week to June 4.

U.S. crude fell about $2 a barrel during the week to settle around $93 a barrel on June 4 as investors agonized over whether the Federal Reserve might be cutting back on its monetary stimulus for the U.S. economy sooner than expected.

Markets have speculated for weeks that stronger economic data might encourage the Fed to pare some of its $85 billion of monthly U.S. government bond purchases. But patchy U.S. data has raised uncertainty about the central bank.

On Friday, U.S. jobs data for May came in strong enough to show recovery in the labor market, but not sufficient to suggest a cutback in Fed stimulus support at this point. U.S. crude finished at above $96 a barrel.

Natural gas, traded on NYMEX and Intercontinental Exchange (ICE), had a combined decline of nearly $2.3 billion in positions held by money managers on the two exchanges during the week to June 4.

Gas futures on NYMEX fell by 4 percent during the week to settle at $3.998 per million British thermal units (mmBtu) on June 4 after concerns that mild weather could severely limit the need for gas-powered air conditioning this summer.

Some commodities actually witnessed a rise in net-long money during the week.

Hedge fund and speculators' net long holdings in NYMEX gold rose by $1.3 billion after bullion prices rose 1.3 percent to around $1,397 an ounce at the close of June 4.

Managed money net-longs on soybeans traded on the Chicago Board of Trade rose by $1.1 billion as prices rose 1.3 percent to around $15.28 on June 4. (Editing by Andrew Hay and David Gregorio)

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