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Oil bull: Shale boom has gone bust

May 04, 2015 11:56 AM ETUCO, USO, OIL-OLD, DBO, TWTI, USL, UGA, UHN, DTO, OLO-OLD, SCO, DNO, BNO, UWTI, DWTI, SZOXF, OILBy: Stephen Alpher, SA News Editor35 Comments
  • Oil production across the Midwest peaked at nearly 10M barrels per day in February, says hedge funder Andrew Hall, and has been falling since. "We have now reached a turning point," says the oil trading legend, and the cutback in supply has "rendered all the doomsday [oil price] forecasts self-defeating."
  • Oil has bounced nearly 40% in the past six weeks, and the rally should continue, says Hall, as it will be harder for producers to ramp production back up than it was to cut back.
  • Hall's Astenbeck funds were up more than 10% YTD, say sources, and gained 10% last year - no mean feat for an oil bull given the drastic decline in prices.
  • EIA data - which led to the agency's prediction of a decline in U.S. output not starting until April - is "essentially an artifice," says Hall, noting it's based on estimates from state agencies that lag by months. A better gauge of output, he says, is an adjustment the agency uses adding up changes to how much oil is in storage, how much was used by refineries, and how much was imported and exported.
  • Flirting with $60 per barrel earlier, black gold is down 0.5% to $58.83.
  • Source: Bloomberg
  • ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, UGA, USL, DNO, UHN, OLO, SZO, TWTI, OLEM

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