Business A.M
No Result
View All Result
Thursday, February 12, 2026
  • Login
  • Home
  • Technology
  • Finance
  • Comments
  • Companies
  • Commodities
  • About Us
  • Contact Us
Subscribe
Business A.M
  • Home
  • Technology
  • Finance
  • Comments
  • Companies
  • Commodities
  • About Us
  • Contact Us
No Result
View All Result
Business A.M
No Result
View All Result
Home Frontpage

Oil slump casualties, energy hedge funds, find new ways to make money

by Chris
August 13, 2017
in Frontpage

For the oil-trading community, the fall of hedge fund manager Andy Hall signalled a heavy blow, but while commodity funds continue to shutter their doors, some are finding other ways to make money, including trading refining margins and calendar spreads.

Commodity hedge funds have dwindled in recent years as oil prices slumped, leaving only a handful of larger players, including Hall, who ran the Astenbeck Capital Management fund until deciding to close it following losses this year.

A number of funds bet heavily on an oil rally early in the year, boosting long futures positions to a record in late February, before oil went into a prolonged slump as global supply remained elevated despite cuts from OPEC.

Many commodity funds have struggled this year as oil stagnated and volatility fell, hurting bets on large back-and-forth fluctuations. According to Credit Suisse, CTA funds – which concentrate on futures – were down 2.8 percent in 2017 through the end of July, while Hedge Fund Research’s commodity hedge fund index was down 0.9 percent through the end of July.

Betting on other spreads has worked better with refining margins increasing sharply this year, as heavy demand for distillates has boosted those margins by more than 50 percent in the last two months.

After remaining depressed for most of 2016, gasoline margins have also rebounded. U.S. refining margins rallied to the highest in nearly two years early this month.

“Refining margins are healthy worldwide and global demand is healthy,” said RCMA Asset Management Chairman Doug King, whose Merchant Commodity Fund runs some $190 million in commodities. That fund is down 12 percent
on the year, however.

Oil dropped sharply in March, bringing down Hall along with others including Andurand Commodities Fund, which through the end of July had lost more than 15 percent, according to a source close to the firm.

Those funds did not respond to request for comment.

“Funds started the year at record length in futures,” said Matthew Perry, a partner at energy-focused hedge fund Kronenberg Capital Advisors LLC. “That turned out to be devastating for most traders.”

Hall’s decline was most surprising, according to traders, given decades of history in the market. But in a late 2016 investor letter, he said OPEC’s deal to cut supply meant the cartel was going to be more heavily involved in setting prices and was likely to be bullish.

Not all funds are doing poorly. A group of 12 energy hedge funds monitored by Eurekahedge are up 5.1 percent so far this year. It is unclear if these funds are included in other indexes.

Volatility, as measured by the CBOE Crude Oil Volatility Index, has fallen in 2017. After two years of big price swings, the oil VIX has generally stayed below 30 in 2017, a level consistent with range-bound trading, which frustrates fund managers hoping for more up-and down the action.

“You can’t put a lot of money to work when crude oil is trapped in a six-dollar range,” said a hedge fund manager who could not comment on the record.

Some funds say they are finding opportunities in other areas, such as calendar spreads. These spreads measure price differences between pairs of contracts with different delivery dates, and they have been moving around more of late.

On Thursday, the December 2017 U.S. crude futures contract traded at a premium to the December 2018 contract briefly, known as backwardation.

“Time spreads and refinery margins have seen significant moves of late,” said a hedge fund industry source who could not comment on the record. “The people who will do well trade dynamically and take long and short positions.”

Previous Post

Nigeria extends deadline to end open sale of drugs to December 31, 2018

Next Post

Saudi Arabia shrinks Q2 budget deficit as revenue rises 6%

Next Post

Saudi Arabia shrinks Q2 budget deficit as revenue rises 6%

  • Trending
  • Comments
  • Latest
Igbobi alumni raise over N1bn in one week as private capital fills education gap

Igbobi alumni raise over N1bn in one week as private capital fills education gap

February 11, 2026
SIFAX subsidiary bets on operational discipline, cargo diversification to drive recovery at Lagos terminal

SIFAX subsidiary bets on operational discipline, cargo diversification to drive recovery at Lagos terminal

February 10, 2026
inDrive turns to advertising revenues as ride-hailing economics push platforms toward diversification

inDrive turns to advertising revenues as ride-hailing economics push platforms toward diversification

February 10, 2026
Egbin Power targets youth employability with tech skills initiative

Egbin Power targets youth employability with tech skills initiative

February 10, 2026

6 MLB teams that could use upgrades at the trade deadline

Top NFL Draft picks react to their Madden NFL 16 ratings

Paul Pierce said there was ‘no way’ he could play for Lakers

Arian Foster agrees to buy books for a fan after he asked on Twitter

JOHN ONYEUKWU

When applause travels faster than hunger

February 12, 2026
OLUSOJI ADEYEMO

Digital workers automating SME hustle without killing jobs

February 12, 2026

Virtual playground, real perils: A parent’s guide to Roblox and the Metaverse

February 12, 2026
EKELEM AIRHIHEN

Transforming African aviation with biometric trends in 2026

February 12, 2026

Popular News

  • Igbobi alumni raise over N1bn in one week as private capital fills education gap

    Igbobi alumni raise over N1bn in one week as private capital fills education gap

    0 shares
    Share 0 Tweet 0
  • SIFAX subsidiary bets on operational discipline, cargo diversification to drive recovery at Lagos terminal

    0 shares
    Share 0 Tweet 0
  • inDrive turns to advertising revenues as ride-hailing economics push platforms toward diversification

    0 shares
    Share 0 Tweet 0
  • Egbin Power targets youth employability with tech skills initiative

    0 shares
    Share 0 Tweet 0
  • Reps summon Ameachi, others over railway contracts, $500m China loan

    0 shares
    Share 0 Tweet 0
Currently Playing

CNN on Nigeria Aviation

CNN on Nigeria Aviation

Business AM TV

Edeme Kelikume Interview With Business AM TV

Business AM TV

Business A M 2021 Mutual Funds Outlook And Award Promo Video

Business AM TV

Recent News

JOHN ONYEUKWU

When applause travels faster than hunger

February 12, 2026
OLUSOJI ADEYEMO

Digital workers automating SME hustle without killing jobs

February 12, 2026

Categories

  • Frontpage
  • Analyst Insight
  • Business AM TV
  • Comments
  • Commodities
  • Finance
  • Markets
  • Technology
  • The Business Traveller & Hospitality
  • World Business & Economy

Site Navigation

  • Home
  • About Us
  • Contact Us
  • Privacy & Policy
Business A.M

BusinessAMLive (businessamlive.com) is a leading online business news and information platform focused on providing timely, insightful and comprehensive coverage of economic, financial, and business developments in Nigeria, Africa and around the world.

© 2026 Business A.M

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
No Result
View All Result
  • Home
  • Technology
  • Finance
  • Comments
  • Companies
  • Commodities
  • About Us
  • Contact Us

© 2026 Business A.M