French oil dealer Pierre Andurand had simply predicted the oil market’s biggest-ever shock.
London, United Kingdom:
French oil dealer Pierre Andurand was catapulted into the highlight this yr after appropriately betting that the lethal novel coronavirus would spark a sub-zero oil market collapse.
Andurand, the 43-year-old founding father of London-based Andurand Capital who runs two multi-million-dollar funds, wager in February that the lethal COVID-19 outbreak might signify a uncommon “black swan” occasion that might ship costs into reverse.
Two months later, in one other exceptional name, the hedge-fund dealer tweeted on the morning of April 20 that oil might flip damaging in an ideal storm of evaporating demand, continual oversupply and scarce storage.
‘Negative costs are doable’
“There is no limit to the downside to prices when inventories and pipelines are full. Negative prices are possible,” tweeted Andurand, who relies in Malta.
“I am not saying it will happen. If it does it would be very short lived. But just be careful out there.”
Andurand, who was born within the southern French metropolis of Aix-en-Provence and studied utilized arithmetic earlier than attending the French enterprise faculty HEC Paris, had simply predicted the oil market’s biggest-ever shock.
Just a number of hours afterwards, New York gentle candy crude nosedived into damaging territory for the primary time in historical past, suffering from demand-destroying coronavirus, an unlimited provide glut and a Saudi-Russian worth warfare.
West Texas Intermediate crude hit a historic low of minus $40.32 per barrel on April 20 as sellers have been pressured to pay to dump the May contract amid scarce storage capability.
That in contrast with round $60 a barrel at the beginning of this yr.
London’s Brent North Sea oil dived to a record-low $15.98 on April 22 however didn’t flip damaging.
Andurand’s funds have sky-rocketed in worth on the again of his exceptional prediction, successful a three-digit share for the reason that begin of the yr.
Yet it has not all been plain crusing. His funds have misplaced cash lately in uneven commerce — and had additionally initially faltered at the beginning of this yr.
The Financial Times described him this month as a “comeback kid” who “performs best when markets are at their most volatile”.
The enterprise newspaper additionally famous his luxurious London townhouse in plush Knightsbridge and his flash Bugatti supercar.
Andurand had beforehand appropriately forecast that oil costs would strike a file peak of $147 per barrel in 2008.
He additionally appropriately predicted they’d crash throughout the infamous world monetary disaster.
Speaking to AFP, Andurand indicated the forensic element of his market evaluation.
“When I feel that there has been a significant change in demand and supply, I analyse it in detail and try to assess its overall impact on oil prices,” the Frenchman defined in an interview.
The dealer mentioned he had realised “at an early stage” that the COVID-19 pandemic could be “hard to stop” for governments the world over.
Andurand added that he then realised there was a “strong probability of containment measures” that might seemingly slam the brakes on world oil demand — and spark a series response that might tank the market.
Fast-forward one month, nonetheless, and oil costs have recovered considerably to commerce at round $35 per barrel, on the again of an easing provide glut and output cutbacks from OPEC and fellow crude producers.
The market has additionally been soothed by the stress-free of lockdowns which have crippled oil-intensive sectors like transport and manufacturing.
Andurand now forecasts costs to proceed to get better, judging that manufacturing cuts have been “sufficient” to take in extra provides.
Some analysts warn nonetheless that oil stays weak to a second wave of coronavirus that would additional injury the worldwide economic system and power demand.
(Except for the headline, this story has not been edited by NDTV workers and is printed from a syndicated feed.)