11-06-2016

Rangebound crude shrank gains for oil-focused hedge funds in May

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The rangebound market for crude oil in May, with prices mostly stuck within a few dollars below $50 a barrel, limited gains for three well-known hedge funds in oil, which nevertheless are up by double-digit percentages for the year to date, returns data and interviews with industry sources showed.

Hedge funds run by renowned oil bull Andy Hall and former Goldman Sachs crude trader Jonathan Goldberg returned to the black after losses in 2015. Ex-Vitol oil trader Pierre Andurand’s fund is on track for its fourth straight year of gains, its best since 2014.

But bullish or bearish on oil, the funds could not make outsized profits in May as they did in earlier months of the year.

Brent and U.S. crude mostly traded in a range of $3-$5 below $50 a barrel last month, making it hard for fund managers to make a clear call on direction, sources familiar with the funds’ returns said. In early June, oil prices have rallied strongly, with Brent nearing $53 and WTI headed toward $52.

Hall’s $2.4 billion Astenbeck Capital Management in Southport, Connecticut gained just 5 percent in May, compared with April’s 17 percent, according to an investor letter from the fund seen by Reuters. Year-to-date, the oil bull’s fund is up 24 percent, after a 36 percent loss in 2015.

Andurand’s London-based Andurand Capital Management, with assets of $1.2 billion, rose about 1 percent last month after a near 7 percent gain in April, a source with knowledge of the returns told Reuters. Andurand Capital declined comment.

Andurand, who turned bullish on oil in recent months, posted a year-to-date gain of almost 14 percent.

Goldberg’s BBL Commodities Value Fund in New York, which manages about $570 million, has gained 21 percent so far for 2016, betting on the relative value of oil versus refined products such as gasoline, diesel and heating oil, an industry source said.

Even so, it only eked out a 2 percent gain for May, smaller than the nearly 5 percent average monthly rise for the previous four months.

A spokesman for BBL declined comment.

Source: Reuters

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