Andy Hall, one of the best-known oil traders who’s bullish on prices, said the decline in the oil market isn’t a repeat of 1998 or 2008.
The absence of “extreme contango,” which occurs when commodities prices close to delivery are cheaper than those to be delivered at later dates, suggests that “the world, whilst moderately oversupplied, is not awash in oil,” Hall said in a letter to investors.
Oil prices, which plunged 32% in 1998 and 54% in 2008, are down more than 50 percent in the past year. Hall, who runs hedge fund firm Astenbeck Capital Management, said US crude output through the remainder of 2015 will decline 6% from the first half’s average. He said he expects to see a decline in production forecasts by the International Energy Agency.
There is probably more than 200 million barrels of crude oil storage capacity still available, Hall said in the letter, a copy of which was obtained by Bloomberg.
Officials at Astenbeck, based in Southport, Connecticut, didn’t return telephone messages seeking comment.
Brent crude, the benchmark for about half the world’s oil, fell 1.1% to $50.10 a barrel on the London-based ICE Futures Europe exchange by 8:48am local time.
Hall also said platinum-group metals prices may gain because of supply deficits.
“We think current prices are discounting a worst case scenario,” Hall said, referring to concerns over demand from China. “Extreme positioning creates the potential for a rapid recovery in prices.”
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