One of the largest hedge funds in the United States said yesterday that it may suffer billions of dollars in natural gas losses, becoming the latest hedge fund to be stung by energy price volatility this year.
Amaranth Advisors' hedge fund, which had more than $9 billion (€7.1 billion) in capital under management, said year-to-date losses may top 35 per cent as it liquidates its natural gas positions.
Energy futures have fallen sharply over the past month as growth in US inventories of oil and natural gas eased supply concerns. "In an effort to preserve investor capital, we have taken a number of steps, including aggressively reducing our natural gas exposure," the fund said.
US natural gas futures, which rose sharply last year following supply disruptions caused by hurricanes, have dropped more than 40 per cent since early August.
"It looks like Amaranth went for the seasonal play on energy futures . . . on natural gas, it looks like they bet on hurricane-related supply problems," said a New York-based energy futures broker. Traders said Amaranth is selling up to €2 billion of European syndicated loans, the bulk of its European loan portfolio, to cover its natural gas positions.
Big money funds have poured billions of dollars into energy and commodity markets over the past three years to capture returns offered by rocketing prices. But these are volatile markets: MotherRock LP's fund collapsed in August on natural gas positions, according to sources.
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