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EXCLUSIVE

Astenbeck fund jumps in February on oil rally that could help Oxy

[March 08, 2014]  By Barani Krishnan

NEW YORK (Reuters) — Famed oil bull Andy Hall's hedge fund rose nearly 8 percent in February in its biggest monthly gain in 2-1/2 years, boosted by a rally in crude oil that could help Occidental Petroleum's chances of selling its stake in the fund.

Occidental <OXY.N>, which acquired a 20 percent stake in Hall's Connecticut-based Astenbeck fund and trading house Phibro in 2009, said last month it wanted to reduce proprietary trading activities.

Oxy, as it is known, has not said anything specific about selling Astenbeck or Phibro, which does some of its proprietary trading, mainly in crude oil and select commodities such as natural gas, platinum and corn.

But speculation is growing that the Los Angeles-based global oil company was preparing to divest some or all of its stake in the two after volatile, and often negative, returns from Hall, who runs both units.

"Everything else being equal, a more profitable Astenbeck is certainly a useful backdrop for Oxy in any negotiations with buyers," said Pavel Molchanov, an analyst who follows Occidental for New York's Raymond James Financial.

"If Oxy decides to sell this business after all, it will certainly get a more fair-market value."

Hall's Astenbeck Capital Management, which manages about $3.6 billion and mostly trades long-dated U.S. and UK oil contracts, told its investors in a note seen by Reuters on Friday that it was up 5.4 percent on the year after posting a 7.7 percent gain in February.

The fund did not respond to requests for comment.

Last month's gain was the highest for the hedge fund since October 2011. Previously, Astenbeck was down 2 percent in January after finishing 2013 with a loss of 8.3 percent.

February's gain came as U.S. oil prices jumped 5 percent on the month after a brutal winter triggered a jump in demand for heating fuel.

The front-month contract in U.S. oil returned to above $100 a barrel in February, the first time since October.

Hall launched Astenbeck as a Phibro subsidiary in 2007. Oxy bought Phibro from Citigroup for $370 million in 2009 but owns only 20 percent of Astenbeck. Hall owns the remaining 80 percent.

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