When the price of natural gas plummeted last Summer, hedge fund Amaranth took a nose dive. Now some investors are worried the same could happen with hedge funds that invested heavily in oil. "In the short term, market sentiment is overwhelmingly bearish and it's possible for (the) price to go lower than $50 (a barrel),” said Victor Shum, an analyst with Purvin & Gertz. On today’s "Morning Call," Mary Thompson looked into whether the steep declines in crude could trigger a hedge fund implosion.
AS CNBC has been telling you, crude futureshave slipped for eight of the first 12 trading sessions of 2007, partly on mild winter temperatures in the U.S. Northeast and growing fuel stockpiles.
“There have been persistent rumors over the last few of weeks of hedge funds or one big hedge fund in distress (because of weakness in oil) and we have found one of them,” explained The Wall Street Journal's Ann Davis. Boone Pickens hedge fund BP Capital has fallen 6% the first two weeks of this year."