Andy Hall: Oil Prices Have Bottomed

Andrew J. Hall, the head of commodity hedge fund Astenbeck Capital believes that the price of crude oil has bottomed, and the only way is up for the commodity.

In Astenbeck’s March 1 letter to investors, which has been reviewed by ValueWalk, Hall writes, “we believe the global oil market is already close to being balanced yet prices are at a level that will continue to destroy supply. The longer they stay at current levels the greater the risk that the world will face a significant supply shortfall in 2017.”

Andy Hall: Oil Prices Have Bottomed

This isn’t the first time that Hall has attempted to call a bottom in the price of oil. Astenbeck has been positioned for a rally in crude prices for around a year now, but so far the rally has failed to emerge. Thanks to its bullish stance on oil prices it’s believed that Astenbeck dropped in value to about $2 billion during 2015 after suffering a 36% loss.

Oil Prices – U.S. Companies Looking for $50 Per Barrel

However, even after suffering these massive losses last year, Hall hasn’t changed his strategy. He continues to believe that oil prices will head higher this year, and after suffering a 20% loss during the first 17 days of 2016 (the fund soon recovered these losses and finished the first month of the year down only 4%), it appears as if Astenbeck’s outlook for the oil market is finally starting to pay off.

Oil Prices Steady After Rising 40% in Recent Weeks

After WTI prices briefly tested $26/bbl during January, they’ve quickly recovered, rallying by 59% to $41.26/bbl at the time of writing.

And Andrew Hall believes that this is just the beginning of the recovery in oil prices, despite what others in the industry may be saying.

Four key themes are running through the market which Hall cites as evidence to support his hypothesis on oil prices:


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