'God of oil trading' remains a bull on crude as he leaves trading house
Andrew Hall, who will focus on his private fund after leaving trading house Phibro, is looking beyond further declines in the commodity
How does a renowned oil trader who bets on rising prices make money when crude plunges 18 per cent in a month? By betting on the US dollar at the same time.
Andrew Hall, renowned for anticipating major swings in the market, posted a 1 per cent gain in his commodity hedge fund last month, sources said. Hall, who is leaving his longtime post as chief executive of Phibro, the century-old commodities trading house now owned by Occidental Petroleum, sees oil falling further as he focuses on his private fund.
"It's a new era," said Carl Larry, a former trader who is now a Houston-based director of oil and natural gas at Frost & Sullivan. "So many things have changed. This will be a chance for him to step back, assess the market, and maybe plot a comeback."
The surprise rise at 64-year-old Hall's Astenbeck Capital Management was driven by his bets on the greenback and a move to sell out of crude contracts before the worst of the rapid decline in prices, according to sources and his letters to investors in the US$3 billion fund. A prolific art collector and Oxford University graduate, Hall is revered as a "god" by rival traders, according to Oil, a 2010 book by Tom Bower.
Known for his conviction that oil prices will rise in the long term and that US shale drilling is overhyped, Hall still sees reasons for an oil rally - eventually. First, he sees crude prices falling further to as low as US$50 a barrel before recovering in the first half of next year, according to his December 1 letter to investors. Astenbeck, which posted losses in 2011 and last year, is poised to finish the year up by as much as 7 per cent, sources said.
The fate of Occidental's Phibro has yet to be determined, with Hall's departure making the future more uncertain. The oil company had already told employees this year that it planned to sell or close its energy trading unit by the end of the year.
Phibro's US employees had not been active in trading for months and the overseas operations might be sold, sources said. Occidental announced plans in February to reduce exposure to proprietary trading, company spokeswoman Melissa Schoeb said on Tuesday.