Hedge Fund Manager Hall Says World Market 'Not Awash in Oil'

(Bloomberg) -- Andy Hall, one of the best-known oil traders who’s bullish on prices, said the decline in the oil market isn’t a repeat of 1998 or 2008.

The absence of “extreme contango,” which occurs when commodities prices close to delivery are cheaper than those to be delivered at later dates, suggests that “the world, whilst moderately oversupplied, is not awash in oil,” Hall said in a letter to investors.

Oil prices, which plunged 32 percent in 1998 and 54 percent in 2008, are down more than 50 percent in the past year. Hall, who runs hedge fund firm Astenbeck Capital Management, said U.S. crude output through the remainder of 2015 will decline 6 percent from the first half’s average. He said he expects to see a decline in production forecasts by the International Energy Agency.

There is probably more than 200 million barrels of crude oil storage capacity still available, Hall said in the letter, a copy of which was obtained by Bloomberg.

Officials at Astenbeck, based in Southport, Connecticut, didn’t return telephone messages seeking comment.

Hall also said platinum group metals prices may gain because of supply deficits.

“We think current prices are discounting a worst case scenario,” Hall said, referring to concerns over demand from China. “Extreme positioning creates the potential for a rapid recovery in prices.”

Brent crude, the benchmark for about half the world’s oil, fell 0.4 percent to $50.49 a barrel on the London-based ICE Futures Europe exchange by 10:22 a.m. Hong Kong time.

--With assistance from David Marino in New York.

To contact the reporters on this story: Simone Foxman in New York at sfoxman4@bloomberg.net; Saijel Kishan in New York at skishan@bloomberg.net. To contact the editors responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net Ramsey Al-Rikabi.


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