Energy funds pumped up

Tue Jun 1, 2004



Dramatic price increases are fuelling speculation about big gains

In his 20 years as an analyst and trader in the energy sector, Peter Linder can't remember a market period like the one he saw in the first few weeks of May. Even with crude prices jumping 40% in a year and hitting an all-time high of $41 per barrel in mid-May, a large number of oil and gas producers have seen their stock prices slump sharply.

"Quite frankly, I was flabbergasted," says Linder, who heads the Canada-based DeltaOne hedge fund, which focuses on the energy sector. "With the higher price of oil, one would expect stocks to rally. But that wasn't happening. The opposite was."

Making the precipitous price slump more bewildering was the fact that a substantial number of oil and gas producers had essentially vanished from exchanges in a spurt of merger activity. Linder notes that in the...

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