The strongest month for oil in six years was not great for some hedge funds whose bets on deeper market declines were frustrated by the April rally.
A weak dollar, Middle East tensions and stalling U.S. output growth sent crude oil futures up as much as 25 percent last month. It was the largest advance since May 2009, and surprised some fund managers expecting a continuation of the drop in three previous quarters that halved prices.
Those hurt by the abrupt turn included Connecticut-based Taylor Woods Capital Management and BBL Commodities in New York. Shale oil skeptic and market bull Andy Hall, however, saw his $3 billion Connecticut-based Astenbeck Capital Management rise about 10 percent through April, according to media reports.
"A lot of money came in suddenly to cover shorts in oil, so much that some fund managers never anticipated that level of short-covering," said a person familiar with April's market conditions.
Activity had also centered on oil's front-month contract, rendering the rest of the market flat and distorting spread trades between nearby and longer-dated contracts.
"The current dynamic, with very high financial flows in the front and very poor liquidity in the back, means that following the daily, weekly and monthly market moves is harder than ever," another industry source said.
Taylor Woods, a near $1 billion fund managed by former Credit Suisse commodity traders George "Beau" Taylor and Trevor Woods, was down between 3 and 4 percent through April, industry sources said. The fund returned about 15 percent last year, and rose in January and March as well, riding the slump in crude.
BBL, which began 2015 with nearly $550 million under management and is run by ex-Goldman Sachs trader Jonathan Goldberg, is down 5 percent on the year, the sources said.
BBL was one of the best performing energy funds in 2014, gaining 51 percent.
Oil's rally has been fueled by the notion that the supply glut that drove prices down just months ago was easing amid tightening world supply. Government data on Wednesday showed the first U.S. crude stockpiles draw since January.