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Astenbeck hedge fund down 5 pct year-to-date as oil slumps
November 8, 2013 / 10:51 PM / 4 years ago

Astenbeck hedge fund down 5 pct year-to-date as oil slumps

* Fund down 3 percent in October

* Hall maintains bullish outlook on oil, natural gas

By Barani Krishnan and Marina Lopes

NEW YORK, Nov 8 (Reuters) - Prominent oil trader Andy Hall’s $4 billion hedge fund was down 5 percent in the first ten months of this year, risking the largest loss in the fund’s six-year history roiled by a weak Brent crude market.

Westport, Connecticut-based Astenbeck Capital Management lost just under 3 percent in October, its fifth monthly loss this year, according to a letter dated Nov. 1 to investors and seen by Reuters.

That compares with a 4-percent loss in September and an almost 3 percent gain in August. If the fund is not able to recoup the losses in the last two months of the year, it would be only its second since its inception in 2008.

A spokesman for the fund declined to comment on the performance numbers.

This year has been a turbulent one for energy-focused hedge funds, with the Brent crude price down 5 percent so far this year and on track for its first annual loss since 2008 amid concerns about oversupply.

Although Astenbeck is invested in other commodities such as platinum, palladium and corn, returns at the oil-focused fund have largely mirrored monthly gains and losses in benchmark crude since it began operating in 2008.

The fund’s performance is broadly inline with the average energy fund on Chicago’s Hedge Fund Research Index, which is down 4.45 percent.

In the letter to investors sent this year, Hall, a veteran oil trader, reaffirmed his belief that rising production costs and low supply growth will boost oil prices in the long term.

He also still expects natural gas prices to recover as demand growth should start to outpace supply.

Gas prices tumbled in October to the low end of this year’s trading range as mild weather weighed on sentiment, but they are up 6 percent so far this year.

Facing greater volatility and falling prices, some commodity hedge funds have struggled to repeat the big returns seen early in the commodity bull run during the early and mid-2000s.

Clive Capital, one of the largest funds trading in oil markets, closed down at the end of September, after losing money in each of the past three calendar years.

Last year, Astenbeck returned 3.41 percent, although it lost 3.83 percent in 2011.

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