For the oil-trading community, the fall of hedge fund manager Andy Hall signaled 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% in 2017 through the end of July, while Hedge Fund Research’s commodity hedge fund index was down 0.9% 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% in the last …read more
Source:: Fortune – Finance