The once very powerful oil cartel, the Organization of Petroleum Exporting Countries (OPEC), is not impressing hedge fund managers over the group's failure to assure the market that oil prices won't collapse.

According to data from the U.S. Commodity Futures Trading Commission, the failure to signal that OPEC will act to prevent a collapse resulted in money managers cutting their net-long positions in West Texas Intermediate (WTI) by 4.1 percent for the week that ended on November 18.

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As a result, the WTI dropped 4.3 percent or $3.33 to $74.51 per barrel at the New York Mercantile Exchange. It dipped further to $74.21 on November 13, but futures improved to $76.85 at 1:57 p.m. in Singapore on Monday.

Explaining the move of fund managers, Energy Analytics Group Director Tom Finlon told Bloomberg, "Traders tend to pull their horns in times of uncertainty ... OPEC is overproducing. With the outcome of the OPEC meeting being unclear, and with generally strong supply circumstances, traders are reducing their positions."

Their move comes ahead of the OPEC meeting in Vienna on November 27 when members would decide whether to cut production or not after prices of oil in the international market plummeted by 30 percent since June.

The lower price of oil is the result of other cleaner sources of fuel being made available on a wider commercial scale that U.S. import of crude oil from OPEC went down to a 30-year-low. By August, OPEC's share of crude oil imports to the U.S. was down 40 percent to 2.9 million barrels daily.

Data from the U.S. Department of Energy said that at the peak of U.S. importation of crude oil from the OPEC in 1976, it accounted for 88 percent of OPEC share in U.S. crude imports now down to 40 percent.

It also accounts for 40 percent of global output or 30.97 million barrels per day in October. It was the fifth consecutive month that OPEC went beyond its 30 million target.

A Bloomberg survey showed that half of Bloomberg analysts believe the producers would reduce their production, while the other half think they would let the status quo remain.

Michael Lynch, president of Strategic Energy & Economic Research, opines that the meeting would not result in any major change in production levels because the Saudis "are not dissatisfied at this price level."

At a meeting on November 12 in Acapulco, Mexico, Saudi Oil Minister Ali Al-Naimi committed the kingdom to a stable oil price and quashed speculations that oil producers are in a war whether to cut or keep production rates at their current levels.

Tagsopec, Oil prices, hedge funds