Oil Prices - Mar 4
Posted: Fri Mar 04, 2016 12:17 pm
Astenbeck’s Hall Says Reason to Believe Oil ‘Bottom Is Now In’
2016-03-03 05:01:00.3 GMT
By Dan Murtaugh at Bloombert
Rapid cuts in oil production are erasing a
glut of crude and will require prices to rise significantly to
stimulate new supply, legendary trader Andy Hall said in a
letter to investors.
Hall has been saying for months that the world isn’t as
awash in oil as many believe, even as prices continued a
prolonged slide before hitting a 12-year-low of $26.05 a barrel
in February. West Texas Intermediate has rebounded 33 percent
since then to $34.66 Wednesday.
“There are good reasons to believe the bottom is now in,”
Hall wrote to investors of his hedge fund, Astenbeck Capital
Management LLC. “Later this year prices will need to rise
further to create supply. We believe that level to be $60 rising
over the next 12 months to $80.”
While Hall has been bullish for months, others are
beginning to see things his way. Amrita Sen, chief oil analyst
for Energy Aspects Ltd. in London, said Monday that global crude
inventories actually shrunk in January and that the market might
be surprised later this year to find that demand is outpacing
supply.
Hall has been trading oil since the 1970s, first for BP Plc
and later at Phibro Energy Inc., where he eventually became
chief executive officer. He gained notoriety in 2009 when he
earned a $100 million pay package from Phibro’s then-owner,
Citigroup Inc. The compensation ignited a controversy over big
paychecks at bailed-out banks. Hall’s hedge fund, Astenbeck,
lost about 35 percent last year, according to a report by CNBC.
Hall said that organizations like the International Energy
Agency, which forecasts the oil glut will last through 2017, are
overestimating how much supply is sitting in storage, while at
the same time underestimating how fast oil production is
falling.
Concerns about demand growth are also overblown, Hall said.
The U.S. economy is unlikely to slip into a recession, and
strong car sales in China mean that demand for gasoline could
surprise people.
“We believe the the global oil market is already close to
being balanced yet prices are at a level that will continue to
destroy supply,” Hall wrote. “The longer they stay at current
levels the greater the risk that the world will face a
significant supply shortfall in 2017.”
Raymond James is forecasting WTI at $60/bbl by the 3rd quarter. As I have posted here many time, the global oil market should be back in balance in Q3 as demand for refined products is forecast (by IEA) to increase by 2,000,000 barrels per day over the next six month. - Dan
2016-03-03 05:01:00.3 GMT
By Dan Murtaugh at Bloombert
Rapid cuts in oil production are erasing a
glut of crude and will require prices to rise significantly to
stimulate new supply, legendary trader Andy Hall said in a
letter to investors.
Hall has been saying for months that the world isn’t as
awash in oil as many believe, even as prices continued a
prolonged slide before hitting a 12-year-low of $26.05 a barrel
in February. West Texas Intermediate has rebounded 33 percent
since then to $34.66 Wednesday.
“There are good reasons to believe the bottom is now in,”
Hall wrote to investors of his hedge fund, Astenbeck Capital
Management LLC. “Later this year prices will need to rise
further to create supply. We believe that level to be $60 rising
over the next 12 months to $80.”
While Hall has been bullish for months, others are
beginning to see things his way. Amrita Sen, chief oil analyst
for Energy Aspects Ltd. in London, said Monday that global crude
inventories actually shrunk in January and that the market might
be surprised later this year to find that demand is outpacing
supply.
Hall has been trading oil since the 1970s, first for BP Plc
and later at Phibro Energy Inc., where he eventually became
chief executive officer. He gained notoriety in 2009 when he
earned a $100 million pay package from Phibro’s then-owner,
Citigroup Inc. The compensation ignited a controversy over big
paychecks at bailed-out banks. Hall’s hedge fund, Astenbeck,
lost about 35 percent last year, according to a report by CNBC.
Hall said that organizations like the International Energy
Agency, which forecasts the oil glut will last through 2017, are
overestimating how much supply is sitting in storage, while at
the same time underestimating how fast oil production is
falling.
Concerns about demand growth are also overblown, Hall said.
The U.S. economy is unlikely to slip into a recession, and
strong car sales in China mean that demand for gasoline could
surprise people.
“We believe the the global oil market is already close to
being balanced yet prices are at a level that will continue to
destroy supply,” Hall wrote. “The longer they stay at current
levels the greater the risk that the world will face a
significant supply shortfall in 2017.”
Raymond James is forecasting WTI at $60/bbl by the 3rd quarter. As I have posted here many time, the global oil market should be back in balance in Q3 as demand for refined products is forecast (by IEA) to increase by 2,000,000 barrels per day over the next six month. - Dan