Hedge funds sold energy stocks at the fastest pace since September 2024, driven by a significant drop in oil prices, which fell over $10 following a cease-fire between Israel and Iran. This sell-off marks the largest in nearly a year and the second-largest in the last decade, with hedge funds primarily focusing on North American and European energy companies. The Goldman Sachs note indicated that while many hedge funds increased short positions, the overall sentiment remained long on global energy stocks.

The recent decline in crude prices, attributed to increased supply from OPEC+, has led to a broader shift in hedge fund strategies, with a notable increase in stock buying across other sectors such as financials, technology, and industrials. Hedge fund gross leverage is at a five-year high, indicating a robust engagement in the market despite the energy sector's downturn. This trend could signal a potential reallocation of investments away from energy stocks, impacting the market dynamics and competitive landscape within the sector.