Oil Investor Hall Sees Conditions Ripe For A Rebound In Crude
SINGAPORE, Jan 27 (Reuters) - After a 2015 that famed oil bull Andrew Hall said "wasn't much fun" because of plunging crude prices, the chief of Astenbeck Commodities says the market is ripe for a jump as producers operate near maximum capacity while supply risks rise.
Hall's Astenbeck Commodities Fund suffered a more than 35 percent drop in 2015 as bullish bets on oil took a hit, pulling its total assets under management to $2.1 billion, according to company documents.
"Last year wasn't much fun for anyone investing in commodities... An uncertain macro-economic climate and a strengthening dollar provided strong headwinds which, combined with moderately oversupplied markets, drove prices to multi-decade lows," he said in a letter to investors this month.
Despite analyst forecasts for crude to fall as low as $10 a barrel, Hall said that conditions were in place for a rebound.
"Conditions for the oil industry have deteriorated dramatically in the past five months... The oil industry cannot function with $50 oil, let alone sub $40 oil," he said.
Crude has fallen by 40 percent in the last five months to around $30, and its price is more than 70 percent below mid-2014 when the rout began.
"The simple fact is that the accepted oil narrative has become uniformly negative," he said. "Prices will eventually have to move to a level that creates supply rather than destroys it.... We believe that price to be well above current levels."
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