Clive Creamed By Precipitous Drop In Oil

May 9 2011 | 1:33pm ET

Plummeting oil prices wiped out Clive Capital's year-to-date gains last week, leaving the world's largest commodity hedge fund almost 10% lighter than it had been at the beginning of the week.

The London-based firm, which has about US$5 billion in assets under management, told investors on Friday that it lost 8.9% last week, or more than US$400 million. Most of the losses came amidst what Clive called "extraordinary" price movements that it said it could not explain.

The five standard deviation daily move of Brent crude on Thursday "annihilated" the oil markets, Clive explained. But the hedge fund said it didn't understand why.

"Economic data were soft early in the week though micro news for oil continued to be bullish," the firm wrote. "Indeed, there was news out earlier in the week of further supply disruptions in Yemen and a substantial technical supply outage in" the United Arab Emirates.

The losses last week left Clive down year-to-date, but it isn't backing off its fundamental premise.

"Physical markets are quite strong," Clive said. "We remain positioned in a number of markets."

Clive wasn’t the only normally sure-footed commodities firm caught off-guard by last week's wild ride: Astenbeck Capital Management, the hedge fund led by former Citigroup star energy trader Andrew Hall, suffered a double-digit loss last week, the Financial Times reports.

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