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Hall’s Astenbeck fund up 5 per cent in May, 3rd month of gains

Hall’s Astenbeck fund upĀ 24 per cent for 2016

Hall's Astenbeck

Hall’s Astenbeck

By Barani Krishnan

NEW YORK, June 7 (Reuters) – Oil bull Andy Hall’s Astenbeck Capital Management rose 5 percent in May for a third straight month of gains as his bets on tightening oil supplies paid off to give the hedge fund its best stretch of returns in two years, an investor letter showed.

Southport, Connecticut-based Astenbeck, which has approximately $2.4 billion under management, is up about 24 percent for 2016, according to the letter issued last week and seen by Reuters on Tuesday.

Last year was Astenbeck’s worst in its nine-year history with the fund posting a 36 percent loss.

Astenbeck did not respond to a Reuters email seeking comment. But Hall, in the investor letter, cited the fund’s persistently bullish outlook on oil.

“Sell in May and go away is what we are told to do and, after the experience of recent years and given a significant gain in oil prices since the lows seen in January, it’s awfully tempting to do just that,” he wrote.

“But then, the underlying story just keeps improving with oil balances tightening more rapidly than expected and with the very real prospect of an extremely undersupplied market later this year and in 2017.”

Hall, who turns 65 this year, had bet on higher crude prices through a near two-year market slump that ended earlier this year.

Brent, the global oil benchmark, hit 8-month highs above $51 a barrel on Tuesday on expectations U.S. crude stockpiles had fallen for a third week in a row and on worries about sliding Nigerian oil output from rebel attacks.

Astenbeck’s three months of gains through May were its best since an unbroken five-month run in 2014, just before Brent fell from above $100 to a 13-year low of $27.

Astenbeck’s double-digit gain for the year also puts it at the upper end of the commodity hedge industry. The average commodity fund tracked by Chicago-based Hedge Fund Research was up 3.5 percent for the year through April, with May data not yet available.

Hall pinned his bullish outlook on the potential difficulties faced by top crude exporter Saudi Arabia in raising output and the protracted rebel crisis in Nigeria, Africa’s largest oil producer.

“Production from the giant fields … which have constituted the major part of Saudi’s oil output … are in steady decline,” he wrote. “Oil production in Nigeria is likely to remain curtailed. It is quite possible that things could get worse before they get better.”

(Reporting by Barani Krishnan; Editing by Tom Brown and Chris Reese)

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