On this, a July 2 Bloomberg reveals the full extent of the damage: At least six energy hedge funds in Europe managing more than $158 million shut down in the first half of 2010 after Brent crude lost 24% in May alone. In the words of two quoted fund managers:
"I certainly can't think of a period when so many in the sector called it a day." AND "The industry is limping... The boom times for most European energy funds ended in 2008, when a six-year rally gave way to the worst recession since the Great Depression."
What would foresight be worth in this situation -- $158 million? Well, there is no number value in knowing that the May turn in crude -- and at best the entire end of the energy boom in July 2008 -- was a foreseeable event.
As the following archive of EWI's Energy Specialty Service analysis reveals, the reversal in crude oil's fortunes was just that: foreseeable. We'll start with the newest to oldest:
In the May 5, 2010 Energy Specialty Service forecast, long-time editor Steven Craig produced an urgent VIDEO update that included the following close-up of crude oil alongside this timely message:
"Today's move really necessitates me stepping in here. Crude has come down and busted through the key points that I'd been citing. Our working assumption at this junctures is that an intermediate advance is complete. Bottom line across the complex is that a top should be in and the market should continue to march down."
Next: At crude oil's all-time peak, the July 10, 2008 Energy Specialty Service forecast went on high alert to a new, downward orientation in the market and wrote:
“Two key topping indicators are still evident – extreme bullish sentiment and relentless media attention. Possible third and fourth signs – volatility and cries for more government regulation of commodity trading – are nearing their heads… It all points to a very mature uptrend.”
