Here's a Bloomberg report relating the oil bullish speculations due to the events in Egypt. If you had to remember only one sentence, it would be: You can speculate all you want, but at some point the fundamentals have to line up with the speculation.
Feb. 7 (Bloomberg) -- Hedge funds raised bullish bets on oil by the most in eight weeks on concern that political unrest in Egypt will spread and disrupt supplies from oil-producing countries in the Middle East.
The funds and other large speculators increased net-long positions, or wagers on rising prices, by 17 percent in the seven days ended Feb. 1, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report. It was the largest gain since the week ended Dec. 7.
Concern of disruptions to the Suez Canal sent North Sea Brent crude to $103.37 Feb. 3, the highest intraday level since Sept. 26, 2008. Brent for March settlement fell $1.93, or 1.9 percent, to $99.83 on the London-based ICE Futures Europe exchange on Feb. 4
About 2.5 percent of global oil output moves through Egypt via the Suez Canal and the Suez-Mediterranean Pipeline, according to Goldman Sachs Group Inc. The waterway was open and operating normally on Feb. 4, Ahmed El Manakhly, head of traffic for the Suez Canal Authority, said by phone.
Oil may drop unless transport through the canal is disrupted, said Hamza Khan, an analyst with the Schork Group Inc., a consulting company in Villanova, Pennsylvania.
“We’re not seeing a decline in traffic,” Khan said. “You can speculate all you want, but at some point the fundamentals have to line up with the speculation.”
Persian Gulf shares gained yesterday, sending Dubai’s index to a week high, as Egypt’s government met with opposition leaders to quell protests, stoking speculation the turmoil in the country may ease. Qatar’s stocks advanced.
Net-long positions in oil held by managed money, including hedge funds, commodity pools and commodity-trading advisers, increased 29,928 futures and options combined to 201,941, according to the CFTC report.