Hedge funds have adopted their most bearish stance on commodity prices since at least 2011, driven by concerns over a potential economic slowdown impacting demand for raw materials ranging from crude oil to metals and grains, according to a report by Bloomberg.

The report cites data from the US Commodity Futures Trading Commission as showing that money managers have accumulated a net-short position of nearly 153,000 futures and options across 20 commodity markets as of the week ending Tuesday, the the largest net-short position recorded, based on data available since 2011.

This significant shift in sentiment marks a departure from the bullish frenzy seen during the pandemic, when supply disruptions and discussions of a commodity super-cycle led speculators to take record-long positions in 2021. However, a slowdown in China – the key driver of demand growth over the past two decades – and an increase in production have dampened investor enthusiasm. Recent market volatility, fuelled by concerns over a potential US recession, has further influenced this bearish turn, flipping commodity bets to negative for the first time since 2016.

The Bloomberg Commodity Spot Index, which monitors futures for energy, metals and agricultural commodities, has declined nearly 11% from its peak in May.

Earlier this week, WTI crude oil futures fell below $73 per barrel – marking a six-month low – despite rising geopolitical tensions in the Middle East and a significant production outage in Libya that removed approximately 270,000 barrels per day from the market.