Oil Pump Havana Cuba
Oil pumpReuters

Crude oil prices have almost bottomed out and "some recovery" is possible by the second half of 2015 as demand grows, according to commodity hedge fund manager Andrew J Hall.

Crude could trade in the $40-a-barrel range in 2015, close to "an absolute price floor," the head of Astenbeck Capital Management wrote in a 2 January letter to investors, Bloomberg reported.

At that price, a significant amount of US and Canadian production cannot cover the cash costs of operating, he said.

Opec-member Saudi Arabia and its allies are looking to drive high-cost producers from the market. While many have assumed that those are US shale drillers, the majority can operate at lower prices, according to the renowned US-based oil trader.

But the most vulnerable, operate in Canada's oil sands and deep-water production, he added.

Cuts in spending this year will eventually result in a supply shortfall, said Hall, who has maintained that oil will become more expensive.

Once prices begin a sustained increase, companies will not be able to rely as much on new crude from projects. Low prices also raise the risk of geopolitical instability, another factor that could prop up oil if a major producer is unable to export, Hall said.

Hall wrote: "Oil prices will stay under pressure in 2015.

"However, current prices are not sustainable in the longer term. The interplay between extreme weakness in the short term and the potential for supply shortfalls in the medium term should create attractive trading opportunities over the course of the coming 12 months."

Westport, Connecticut, US-based Astenbeck manages some $3bn (£1.98bn, €2.53bn).

Hall is revered as a "god" by rival traders, according to "Oil", a 2010 book by Tom Bower.