Despite the widely held notion among market researchers that crude will linger between $40 and $50 for much of this year and next, Hall said: "We suspect their projection of current prices into the future will again be frustrated by the market. For that reason we have closed out all of our bearish bets (at a substantial profit) and started adding to our bullish ones. We might be premature but think the chance of seeing new lows for oil prices—other than possibly at the very front of the [West Texas Intermediate] curve—is relatively small even though volatility is likely to remain high in the coming months."
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Hall's fund returned 3.9 percent through the end of February, according to someone familiar with its performance. Yet a significant number of other oil traders and crude-market analysts disagree with the notion that the market's lows are more or less established.
In its own most recent investor note, for instance, analysts at Barclays Capital noted that oil markets are currently supported by "a few transient fundamental factors and shades of confidence," but added that "we expect further weakness ahead as these factors fade."
In the letter, Hall cited a number of reasons why oil prices should recover by later this year, including the dramatic fall in rig counts in the U.S., which should reduce year-over-year production growth before the end of 2015; widespread capital spending cuts at shale producers; the collapse in oil well permits in Texas since October; expectations of slower production growth in places like Brazil and Russia; and a likely uptick in demand growth due to both seasonal and secular factors.
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"In short," he wrote, "we think it is time to look beyond the rapidly building crude inventories of the next month or two and focus on the much improved supply and demand fundamentals that will assert themselves later this year."