Old-school traders of physical oil teach hedge funds a lesson By Reuters Friday, July 18, 2014 Email this story | News Tracker | Reprints | Printable Version LONDON (Reuters)âA near 10 percent drop in international oil prices since last month has taught a painful lesson to many hedge funds and other speculators in energy futures: you can ignore physical markets for only so long. Hedge funds piled into what seemed a one-way bet in early June, grabbing up oil contracts as the rapid advance of Islamist insurgents in northern Iraq threatened supplies from OPEC's second-largest producer at the same time that peak summer demand was approaching. The influx of buying helped drive Brent crude oil to a nine-month peak above $115 a barrel, but signs the spike would be short-lived were hiding in plain sight, according to interviews with senior oil traders this week. http://www.hedgeworld.com/open_news/read_newsletter_aa.cgi?section=peop&story=peop6019.html