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Whispers Of Liquidation As Oil Trading "God" Loses 10% In November; Down 26% In 2015

Tyler Durden's picture




 

Today, one person is following the gyrations in the oil market, which first rebounded after the DOE crude storage data only to tumble immediately thereafter after all the upside stops had been taken out...

 

... with very close attention: the same person many had dubbed the oil trading "god", former Citi and Phibro trader, Andy Hall.

Andy Hall's story has been closely documented here: about a year ago, we learned that as a result of the dramatic move lower in oil and other commodities, 113-year-old Phibro, where Hall worked, would shut down after it was unable to find a buyer.

Since then things have gone from bad to worse for Hall, who suffered his second biggest monthly loss ever in July when he was down a whopping $500 million. The next month many thought could be Hall's last, with oil continuing its drop until the very end of the month, before a mysterious and completely unexpected surge in oil (driven by a collapse in OVX, or the oil VIX) send oil soaring on the last few days of trading.

As oil spiked in August to save Hall's month, it was clear that someone was buying calls in massive size - sending volatility soaring (which would typically sync with lower prices). However, as those calls matured and "real'" weakness resumed so unmanipulated prices fell back to reality and Oil vol once again surged.

But while the late August ramp may have delayed judgment day for Hall, it may still be coming in the next few weeks, which would mean the erstwhile oil-trading "god" could be facing two blow ups in the span of one year.

According to the Journal, Andy Hall's Astenbeck hedge-fund lost 9.7% in November, bringing 2015 losses to more than 26%. As a result of capital losses and mounting redemptions, Astenbeck’s assets under management fell to $2.4 billion, down from $3 billion at the start of the year and nearly $5 billion less than three years ago.

The fund is on track for its worst year since its inception in 2008.

Not surprisingly, the WSJ adds, Hall has remained bullish on oil throughout the deep downturn in the crude market this year and last.

In a letter to clients dated Dec. 1, Mr. Hall showed no sign of altering his views on the market. Throughout crude’s 30% fall this year, he has continued to cite data points that suggest a turnaround in prices soon.

 

Oil companies’ hedges, used to lock in prices, are beginning to expire, Mr. Hall noted in his letter. By next year, most companies will be fully exposed to low prices, with oil futures trading at nearly seven-year lows and the U.S. benchmark contract around $37 a barrel on Tuesday.

 

”The longer term story regarding oil remains very much intact,” Mr. Hall wrote. “Indeed the longer prices remain at current levels, the more powerful the ultimate recovery will likely be. The oil industry simply cannot function with oil prices stuck at current levels.

 

”Now is not the time to exit the market,” Mr. Hall added.

Sadly, OPEC did not get Hall's letter to clients. As for Hall himself, unless he can recreate his dramatic option play from the end of August and send oil spiking, the time when the oil trader has to exit the market for good could be in a few weeks when LPs in his fund send in their terminal redemption requests, and lead to an even greater plunge in the price of oil as Hall is forced to unwind all of his massively levered bullish bets.

In fact, according to several traders, some of the heavy offers in the market in recent days have come from the Soutport, CT-based firm itself which may be beyond the point of no return, and which if true, would explain why Goldman is expecting a $20-handle print in crude in the coming weeks.

 

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Wed, 12/09/2015 - 12:44 | 6899952 Bangin7GramRocks
Bangin7GramRocks's picture

Another useless eater who provides nothing to this world.

Wed, 12/09/2015 - 13:09 | 6900088 TheBoyPlunger
TheBoyPlunger's picture

Just think, all this guy had to do is fade every one of Gartman's oil calls during the last year and he would have been a trillionaire.

Wed, 12/09/2015 - 13:49 | 6900269 MalteseFalcon
MalteseFalcon's picture

Oil speculators can drop dead.

Wed, 12/09/2015 - 13:56 | 6900302 Larry Dallas
Larry Dallas's picture

When does his trophy wife get liquidated? I recall seeing a pic of here on this site at some point this year. 

Wed, 12/09/2015 - 21:30 | 6902211 sun tzu
sun tzu's picture

Oils well that ends well

Wed, 12/09/2015 - 12:44 | 6899956 THE COIN
THE COIN's picture

Debtors Prison and WaterBoarding is in his Future.

Wed, 12/09/2015 - 13:11 | 6900103 Antifaschistische
Antifaschistische's picture

So, this guys personal net income will only be $100,000,000 this year?  Management Fees RULE!!

Wed, 12/09/2015 - 12:45 | 6899962 JustObserving
JustObserving's picture

No one can win going against a manipulated market.  Obama wants lower oil prices to hurt Putin and Russia.  So going against the hegemon who manipulates every market is financial suicide as Andy Hall is finding out.

So much for free and fair markets in the West.  They are as mythical as a free and fair press in the West.

Wed, 12/09/2015 - 12:55 | 6900007 KnuckleDragger-X
KnuckleDragger-X's picture

The pump and dumps are becoming less effective as the opera continues, but someody is going to be eating some really shitty paper when the fat lady starts singing......

Wed, 12/09/2015 - 13:14 | 6900114 inhibi
inhibi's picture

You think Obama is manipulating oil prices?

 

OMFG what a laugh!

 

 

Wed, 12/09/2015 - 13:39 | 6900218 Grimaldus
Grimaldus's picture

@JO

Obirdbrain wants lower oil prices? In what alternate reality? Why would you say something totally not true? Thought you could prop up your progressive messiah hero with a little sneaky bullshit? I mean WTF????? Obirdbrain is a murderer.

Cheap hydrocarbon energy gives the world poorest people a higher quality of life not achievable any other way. Obirdbrain and his progressive eco-murderers work very hard to deny that quality of life improvement.

All of this "the world will end if oil prices are not high" propaganda makes me want to puke.

 

 

Grimaldus

Wed, 12/09/2015 - 12:46 | 6899966 pemdas
pemdas's picture

Never heard of this guy, and glad I never did.

Wed, 12/09/2015 - 12:46 | 6899968 eyesofpelosi
eyesofpelosi's picture

This guy should take over at Sears?

Wed, 12/09/2015 - 12:46 | 6899969 Bangin7GramRocks
Bangin7GramRocks's picture

Poor penis with ears. I feel so bad for him and his kin.

Wed, 12/09/2015 - 12:47 | 6899974 J Jason Djfmam
J Jason Djfmam's picture

All that and lost his hair too.

Wed, 12/09/2015 - 12:49 | 6899976 buzzsaw99
buzzsaw99's picture

don't worry about hall. he got plenty. just another maggot speculator who never gets his hands dirty but makes all the fucking money fucking up the real eCONoME. the gains he keeps. the losses are someone else's problem.

Wed, 12/09/2015 - 12:49 | 6899985 Dr. Engali
Dr. Engali's picture

Please, oh please start a war. Bonus season is just around the corner.

Wed, 12/09/2015 - 13:02 | 6900053 NotApplicable
NotApplicable's picture

That has to be his entire game plan at this point. I wonder if he thinks he's in "the know."

Wed, 12/09/2015 - 12:51 | 6899993 magnetosphere
magnetosphere's picture

he ain't no god.  goldman sachs and JPM are gods.  but their day of reckoning is coming too, and soon

Wed, 12/09/2015 - 13:04 | 6900060 NotApplicable
NotApplicable's picture

My guess is that they (with the help of the NY Fed) will destroy every other bank first.

Wed, 12/09/2015 - 15:08 | 6900575 Blankenstein
Blankenstein's picture

The sac and morgue aren't gods either.  If they were, they wouldn't have needed to get Hank and company to bail them out using taxpayer money.  They also would be able to make big money without cheating or infiltrating the government with their former employees to influence decisions in their favor.  

Wed, 12/09/2015 - 12:59 | 6900033 ToSoft4Truth
ToSoft4Truth's picture

Make him Secretary of State.

Wed, 12/09/2015 - 13:04 | 6900059 firstdivision
firstdivision's picture

He is right that in the long-run, oil will move back up.  The problem is staying liquid through the short-run.

Wed, 12/09/2015 - 13:36 | 6900201 Son of Loki
Son of Loki's picture

It's gonna be wild when oil rebounds back up pasy $150/bbl.

Wed, 12/09/2015 - 13:20 | 6900134 ghostzapper
ghostzapper's picture

Classic example of how digging your heels in with your FA (nothing more than your opinions and feelings) and thumping your chest can easily lead to disaster when TA is/was MUCH more likely to at a minimum help you avoid implosion.  

But, I must not forget charts don't matter because all of the geniuses like this gem know everything!

Wed, 12/09/2015 - 13:32 | 6900187 venturen
venturen's picture

little tougher to manipulate the entire oil market....when you don't have Citibank to back you! 

Wed, 12/09/2015 - 13:40 | 6900224 I am a Man I am...
I am a Man I am Forty's picture

It's tough to get the timing right on these things.  Especially with our number one ally, Saudi Arabia, flooding the market.

Wed, 12/09/2015 - 13:45 | 6900241 Junerberno
Junerberno's picture

Everyone whjo gives Andy Hall money knows he will use it to go long. There is no moral hazard here- blame the investors, not Hall who is just taking advantage of the situation. Same as Paulson and Gold.

Wed, 12/09/2015 - 13:47 | 6900252 Wahooo
Wahooo's picture

Is Hall sleeping with Gartman? He better stop listening to those sweet nothings

Wed, 12/09/2015 - 14:05 | 6900343 Fuku Ben
Fuku Ben's picture

$3 Billion, following my detailed segment analysis and strategy last year up through now, which was 100% accurate, and Astenbeck should be well into 11 figures, if not 12 by now.

@JustObserving Actually it is far easier to win against this manipulated market than you know. And it is actually not so hard to figure out the details of the control and manipulation scam. You can win but not too big because the criminal class will spot you. Similar to counting cards in a casino. Then if they find out you're actually onto their game they'll really put the screws to you because you would be a threat to their control and false sense of power. They'll try to reason with you, bribe you, tempt you with women or men of what ever floats your boat, they'll try to entrap you, threaten your family, friends or threaten you or find some other means of leverage. If none of that works when all else fails they'll find a low level sucker(s), including one of the numerous gangs, criminals, dirty cops or others to nail gun you or throw you off a building as we've seen all too frequently lately. Then they'll sometimes kill their patsies so it can't come back to them with some higher level sucker more under their thumb. Then they're monitor that sucker and the slightest chance of disloyalty and they'll kill them too.

And there you have the truth laid out in a brief overview of how things work and are run on the prison planet. Crime Inc. has it all laid out in just 1 flow chart. And this is just 1 layer of what's going on. It is not pretty and far easier for most to just stay asleep. Pink fluffy unicorns appeal to many.

Wed, 12/09/2015 - 16:18 | 6900867 Reflexarc
Reflexarc's picture

Tyler: been a while.
The call buying in oil you correctly deconstruct is no different than the silver play phibro did yrs ago... The old "second silver whistle blower" said so to me. He sent details to you just now.
Safe bet is hall was the call buyer for nefarious reasons

Wed, 12/09/2015 - 16:56 | 6901053 Barrack Chavez
Barrack Chavez's picture

This article just proves that at least one of the authors writing under the Tyler pseudonym knows nothing about trading.

If you never want to have a draw-down or take risk, then put your money in an FDIC insured savings account. You will safely earn 0.15%, minus taxes, minus 2-3% inflation. But your money will be "safe".

Real businesses take risks, and have draw downs.

Wed, 12/09/2015 - 17:18 | 6901158 Youri Carma
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