Pierre Andurand, one of the most bullish oil investors, lost 15.2 percent in July after markets sold-off, bringing his eponymous hedge fund into the red for the year, according to people familiar with the matter.
After the July loss, the oil-focused Andurand Capital Management LLP fund was down 5 percent through the first seven months of the year, the same people said, asking not to be named discussing private data. The losses came as global oil benchmarks suffered their biggest monthly drop since 2016.
The energy market was wrong-footed after Saudi Arabia, under pressure from U.S. President Donald Trump to lower fuel prices, pushed OPEC in late June to boost oil production. Riyadh actually preempted the meeting, already boosting output significantly through the month, sending prices down in July.
West Texas Intermediate, the U.S. benchmark, fell 7.3 percent in July. Other oil gauges also moved sharply. The price spread between WTI and Brent narrowed from late June to mid July and time-spreads also gyrated.
Still, oil prices are up year-to-date, with WTI posting a 13.8 percent gain from January until the end of July, and Brent adding 11 percent in the same period.
In late July, Andurand took to Twitter to say that the “weak oil physical market” wasn’t just due to Saudi Arabia and other OPEC nations boosting output, but mostly because China was buying less crude. “Their low imports are not sustainable,” he wrote.
Pierre [email protected] The weak oil physical market is not only due to more OPEC oil on the water. It is mainly due to China de-stocking. Their low imports are not sustainable. They have been very low for 3 months. Their imports could go back up 2 any time now…Sent via Twitter for iPhone.
The losses are a rare setback for Andurand, who made a name for himself by calling past gains and losses in the oil market largely right. Last year, his fund delivered a 2.2 percent return net of fees, bucking losses that hit others. Legendary trader Andy Hall shut his flagship Astenbeck Master Commodities Fund II in August 2017 after it lost almost 30 percent of its value in the first half, while Jamison Capital Partners shut its commodities fund earlier this year.
Andurand, who manages about $1 billion in assets, launched his hedge fund in 2013 and has been positive every year since, including record annual returns of 38 percent in 2014, net of fees, when oil markets plunged.
The prominent hedge fund manager has been consistently bullish in recent months. In a series of tweets online earlier this year, he warned that the current reluctance of energy companies to invest in new long-term production meant that $300 barrel oil was ” not impossible” within a few years. He later deleted those posts.
Other oil-focused hedge funds include David D’Alessandro’s CMDTY Capital Management, BBL Commodities, run by Jonathan Goldberg, and Taimur Hassan’s Frere Hall Capital Management.
A spokesman for Andurand Capital Management LLP declined to comment.