Hedge funds, oil bets decline most in 6 months

Hedge funds cut bullish bets on crude oil by the most in more than six months on growing concern that the faltering economic recovery will sap energy demand. The funds and other large speculators cut wagers that prices would rise by 16 per cent by the end of last week, the most since January 25, according to the Commodity Futures Trading Commission\'s weekly Commitments of Traders report. Crude dropped 5.8 per cent on the New York Mercantile Exchange in the period covered by the data. The US economy grew less than estimated in the second quarter and manufacturing increased at the slowest pace in two years in July, reports showed in the past two weeks. Crude inventories rose as gasoline demand dropped 3.1 per cent from a year earlier in the week ended July 29, according to MasterCard\'s SpendingPulse report. Article continues below Rational reaction Oil touched the lowest price in more than eight months as stocks and commodities dropped after Standard & Poor\'s cut its rating of US debt. \"I would have been astounded if we had seen people increase their long positions,\" said Tim Evans, an energy analyst at Citi Futures Perspective in New York. \"It\'s a rational reaction to all of the ugly macro economic data that we\'ve been seeing.\" Oil for September delivery dropped as much as five per cent to $82.52 (Dh303.1) a barrel on Nymex, the lowest intraday price since November 24. Prices were down $3.33 to $83.55 at 11.36am. Futures tumbled 9.2 per cent last week, following a 4.2 per cent decline in the previous five days. Stocks decline The Standard and Poor\'s 500 Index fell to 1,199.38 on August 5, the lowest level since November 30. S&P\'s GSCI Index of 24 raw materials slid to 644.95 on August 4, the lowest since June 27. US gross domestic product rose at a 1.3 per cent annual rate in the second quarter, less than the 1.8 per cent median estimate of economists surveyed by Bloomberg News, a Commerce Department report showed on July 29. The ISM manufacturing index decreased to 50.9 in July from 55.3 in June, the Tempe, Arizona- based Institute for Supply Management said on August 1.