Hedge funds unloaded energy stocks last week at the quickest pace since September 2024 — and the second-fastest in the past decade — as easing Middle East tensions sent oil prices tumbling, according to a Goldman Sachs note seen by Reuters on Monday.
Crude prices dropped more than $10 last week after a cease-fire between Israel and Iran calmed geopolitical fears. Oil prices wavered again Friday amid reports of increased OPEC+ supply and remain well below April’s highs near $81.
Starting June 23, hedge funds sold shares of energy-related companies across all major regions, Goldman said in the note sent to clients Friday. The selling spree included stocks of oil, gas, consumable fuels, as well as energy equipment and services firms.
“This was the largest weekly selling in the sector in almost a year and the second largest in the last 10 years,” Goldman wrote.
Hedge funds aggressively cut positions in North America and Europe, with European trades seeing a sharp addition of short positions and an exodus from long bets, the note said. Short positions reflect bets that asset prices will decline, while long positions anticipate gains.
Despite the wave of selling, speculators’ combined positions remained net long on global energy stocks, indicating a continued tilt toward expecting longer-term gains in the sector.
Gross leverage — a measure of how many positions hedge funds hold relative to assets — is still at a five-year high, Goldman said, signaling funds remain broadly active across markets.
In contrast to the energy sell-off, last week marked the biggest overall stock buying in five weeks as hedge funds snapped up shares across every global region. Financials, technology, and industrial companies were the most popular targets for new purchases, the note added.