Oil is in an early bull run despite the notion prices have rebounded too fast, too soon, hedge fund manager Jonathan Goldberg says as his energy-focused investment fund posts a 9 percent gain in the first quarter of this year.
"Yes, the market is not as short as it was when prices were $26 (a barrel)," Goldberg, manager of the energy-focused $550 million BBL Commodities Value Fund in New York, told investors in a quarterly letter seen by Reuters on Monday.
"But we think the attention around the short-covering in the oil market may be overstated," the former Goldman Sachs trader wrote. "We think there is ample room for more, not less, investment in the oil space."
Goldberg is one of the better performers among energy hedge fund managers this year.
Hedge Fund Research, an industry database in Chicago, said the average energy hedge fund gained about 3 percent through February, with March data yet to be collated.
Oil has risen 40 percent from 12-year lows hit in mid-February, with European benchmark Brent trading at around $38 and U.S. futures at about $37, helped by a production freeze planned by the Organization of Petroleum Exporting Countries and a weak dollar.
Some industry analysts say the rally has breached fundamentals. Trade data on Friday showed hedge funds cutting their net long position in U.S. crude the first time since mid-February.
Goldberg asserted that oil's upward momentum was not over. He said the low prices earlier this year "were driven not by any fundamental concern (such as a breach of storage or weak demand) but by irrational bearish bets made on the macro landscape."
Other energy-focused hedge funds posted varying results for early this year.
Connecticut-based Astenbeck Capital Management, with $2 bilion in assets run by oil bull
Andy Hall, was down 6 percent through February, according to a recent Astenbeck investor letter seen by Reuters.
Goldberg rose to prominence when BBL gained more than 50 percent in 2014, a year after its launch, before losing more than 10 percent last year.
This year, the fund mostly made winning bets on spreads of long-dated crude versus nearby contracts and on the rally in U.S. gasoline, said market sources familiar with the wagers.
Mark Strachan, a spokesman for BBL, declined to elaborate on the BBL investment quarterly letter's posting of the 9 percent first-quarter return and Goldberg's remarks that it published.
A representative for Astenbeck did not immediately respond to a request for comment.
(Reporting By Barani Krishnan Editing by W Simon)