Andy Hall has been one of the most prominent investors and analysts in the oil market for decades.
Some time around the winter of 2017 in a WSJ article (which I cannot find now, unfortunately), I remember I read him saying that the price of oil would be at $70 by the end of 2017. He had mentioned that he could simply pick up the phone and talk to anybody in the oil industry at any time. He was so confident in his analysis and forecast at the time.
Around 6 months later in August, he closed his main hedge fund Astenbeck after losing 30% through betting on oil, while S&P 500 was up by almost 10% in the same period. In fact when he closed down the fund, Bloomberg channel reporter was saying that everybody in the oil industry, including the OPEC countries should be warned if Andy Hall failed.
Andy Hall blamed it on algorithmic trading systems that disrupted commodities trading and fundamental analysis.
Now three months after he closed Astenbeck, oil prices are up again, and are expected to remain in the range of $55 to $65 for the rest of the year. Energy ETF shares are higher by 8% since their lowest on August 21st. Oil prices have been up by over 10% since August.
Now two matters are unknown to me – and I do not have much knowledge of algorithmic trading systems, unfortunately, so, I have just questions with no answers:
- As mentioned in my previous article, with AI trading, will trading and investment make any sense anymore? Again, I would compare it to all gamblers in a casino betting on the jackpot at the right time.
- Second, and even worse: can algorithm developers and data miners manipulate information and/or prices to the benefit of themselves and their own institutions at the expense of the public and ordinary investors?
References:
https://www.cnbc.com/2017/08/14/oil-trading-god-andy-hall-says-hes-met-his-match-robots.html
https://www.forbes.com/sites/stevehanke/2017/07/31/is-the-oil-god-andy-hall-dead/#676f21bf59bf