By Carleton English Andrew "Andy" Hall Bloomberg via Getty Images The oil trading “God” has spoken — and is said to be closing down his main hedge fund because he just can’t make a profit with such low-priced oil. More On: oil Why the stock market has taken a hit lately GE to sell $4 billion stake in Baker Hughes oilfield services Why raising gas taxes makes sense now Judge blocks Keystone XL pipeline in blow to Trump Low volatility and plummeting prices in crude helped contribute to a 30 percent decline in Andy Hall’s Astenbeck Fund this year through June 30. While the tough market in oil is bad news for uber-traders like Hall, it is great news for American motorists, for example, who have seen low pump prices for months. Legendary trader Hall, who earned the nickname “God” after earning $100 million in profits in 2008 thanks to perfectly timed oil trades, doesn’t see a quick turnaround in low crude prices on the horizon. West Texas Intermediate crude closed Thursday at $49.03 a barrel — and except for a few days has traded below $60 since December 2014. It is down 8.7 percent this year. “It looks increasingly like oil prices will be range-bound for some time to come,” Hall wrote in a letter to investors last month, a copy of which was obtained by the Financial Times. It is a humbling end for Hall’s main fund. In 2008, the turmoil of the financial crisis made him a king on Wall Street. And why not? He already had his own castle in the German town of Astenbeck and 5,000 works of fine art — including Andy Warhol works — as proof of his oil trading prowess. Soon after Hall left Citigroup, he reportedly raised $1 billion in 2010 for his new hedge fund: Astenbeck Capital Management. But the last few years have not been quite so kind to commodities traders. Hall’s decision to cut bait comes as the hedge fund’s flagship fund fell roughly 30 percent in the first half of the year, Bloomberg first reported, citing sources. “The exit of Andy Hall is very concerning. He is only one of many funds that no longer feel the energy market is a good trading risk-reward value,” David Greenberg, former New York Mercantile Exchange (NYMEX) board member told The Post. “I don’t expect to see huge spikes in the $100-115 range again, barring a major event in the Mideast, in which we could see a short-term spike,” Greenberg said. Goldman Sachs said on Wednesday that big oil companies have been able to adapt to the $50-range thanks in part to cost-cutting. The low prices and low volatility make it tough for traders to quickly make up for losing bets. “In the past you could be wrong but still trade around your position, and you could end up even,” Greenberg said. “Now there’s a real lack of intraday volatility, which makes it harder for funds both short-term and long-term to sustain losses in their portfolio,” he said. Reps for Astenbeck Capital Management declined to comment. Hall did not respond to requests to comment. https://nypost.com/2017/08/03/legendary-oil-trader-forced-to-shutter-hedge-fund-amid-low-prices/
Lucky trader Hall, who earned the nickname “God” after earning $100 million in profits in 2008 thanks to perfectly timedoiltrades, doesn’t see a quick turnaround in low crude prices on the horizon. Corrected. Admittedly I would rather be a rich lucky trader than a good poor one
just goes to show, it duddn't matter how smart/connected/ivy-league pedigreed you think you are, the market is and will always be bigger than you...
Here's a question for the thoughtful.... Would you rather be a good career trader who consistently makes a living every year, say a couple of hundred thou a year for a 30 year period...or would you rather be a lucky trader who makes 100 million one year and loses a million every other year for 29 years?
from the Financial times Add to myFT Oil bull Andy Hall renounces faith in price recovery Letter to hedge fund investors says Opec and the market have ‘run out of runway’ Prices have dropped more than 20%t since the start of 2017 © Getty Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) Save Save to myFT David Sheppard, Energy Markets Editor JULY 6, 2017 Print this page23 Andy Hall, the energy hedge fund manager once nicknamed “God” for profitably predicting price moves, has renounced his long-held faith in a significant recovery in the oil market. The head of the $2bn Astenbeck Capital fund told investors that Opec had failed to do enough to end the three-year oil market crash, with the efforts of the producers’ cartel swamped by the rapid rebound of the US shale industry. “It looks increasingly like oil prices will be rangebound for some time to come,” Mr Hall said in a letter seen by the Financial Times, in which he predicted high levels of oil inventories would persist and potentially grow next year. “In short, Opec, the market and oil bulls have run out of runway,” said the letter, which was sent to investors this month. The move is a significant reversal for inveterate oil bull, who made huge gains in the era of $100 a barrel oil, with his argument that under-investment in the oil industry in the early part of this century would lead to supply shortages without higher prices. That call helped land him a $100m payday for trading done while at Citi during the peak of the financial crisis after prices soared to record levels above $140. In spite of crude slumping from above $110 in 2014 to below $30 last year, Mr Hall rarely wavered from his long-term view, arguing prices must recover to stimulate enough supply to meet growing demand in emerging markets and to offset output declines at ageing fields. But his position has been upended by US shale, which has roared back in 2017 as prices have recovered and averaged near $50, with producers becoming more efficient and squeezing down costs. Astenbeck was not immediately available for comment on Mr Hall’s letter. Mr Hall said oil price weakness had been exacerbated by Opec’s own decisions, including agreeing too small a supply cut, failing to cut exports by as much as production, and “talking up” the market, allowing US shale drillers to lock in new financing when prices briefly rallied. “In hindsight, Opec’s attempts to manage supply were poorly conceived. Opec should have acted more quickly and more decisively,” he said. “Hitherto it had been our view that oil would trend higher as prices would need to rise to a level that would justify investment in more costly sources of supply than just the core areas of US shale,” Mr Hall wrote in the letter. “However, not only has the core shale oil resource grown significantly — above all in the prolific Permian basin — but break-evens have dropped because of secular productivity gains outpacing cyclical cost increases, at least for now.” While shale producers were struggling to generate cash flow with prices slipping back below $50 a barrel, lenders had continued to extend money to the industry, Mr Hall said. “There has been no shortage of capital to fuel the growth. It is becoming increasingly evident that, under most reasonable scenarios, US shale oil will be the marginal source of supply, at least until 2020,” Mr Hall said. “Incremental US shale oil production alone can balance the market for the next two or three years.” Mr Hall also argued there was increasing belief that shale could keep growing so long as oil was within touching distance of $50, pointing to how long-dated future prices have come down to this level and a recent Goldman Sachs study suggesting most shale plays worked at $45. “If the marginal cost of oil for the next 3 or 4 years really is headed to the mid-$40 range then Opec’s attempts to push prices to $60 seem futile.” Mr Hall said his fund would now take a more “opportunistic” approach to trading, abandoning his long-term bullish positions in favour of a more tactical short-term approach. “Whereas it once seemed positions could be held with an eye to a longer term secular appreciation, that is no longer the case.” Brent crude, the international oil marker, was up 66 cents at $48.43 on Thursday
Kinda like "would your rather sell vol or buy vol?". Second scenario with a much shorter career sounds like the best option. Doubtful a guy could run a fund for 29 years with such pitiful performance. OTOH, the ability to milk fees by being the vol seller for long stretches overcompensates the "steady eddie" while hiding all the risk of the one week/month spectacular blow up (see numerous examples of this from past two decades).
to the OP: You have confused me with your re-posting of an article from those crude lows in summer 2017. I remembered this guy closing shop then, so no idea why you are posting in over a year later. That closing and the news of another operator basically being liquidated in May 2017 were great contrarian actions that I remember very well. This recent rout is very reminiscent of what was going on in 2007-08, only that one started from a much higher benchmark. I remember guys blowing out of trades day after day trying to bottom tick crude in that rout.