“The Rise and Fall of Hedge Fund Manager Pierre Andurand and Andurand Capital’s High-Risk Fund”

The French hedge fund manager Pierre Andurand is among the world’s best-known energy traders. He is behind the commodity investment company Andurand Capital, where Norwegian Håkon Haugnes is finance and operations director.

Since the turn of the year, the high-risk fund Andurand Commodities Discretionary Enhanced Fund has fallen a whopping 46 percent, according to Bloomberg. In May, the fund is said to have fallen nine percent.

The decline comes after three years of insane returns. In 2020, the high-risk fund received a return of a whopping 154 per cent, after the coronavirus caused a collapse in oil prices. In 2021 and 2022, the fund rose by 87 and 59 per cent respectively.

– All we do is analyze supply and demand. When the coronavirus appeared, we worked day and night to find out how it would probably spread and what it would mean for the oil market, CFO Haugnes previously told DN.

Haugnes met Andurand when he was studying in Toulouse in France in the 1990s. After a few years as a technology entrepreneur in Norway, Haugnes moved to London, and has worked for Andurand since 2009.

Believed in higher oil prices

Andurand Capital only trades options and futures contracts, and mainly in oil and oil products. All investment decisions are taken by Andurand himself, while Haugnes is responsible for the operational aspects.

Just three months ago, Haugnes told DN that oil prices did not reflect the fundamentals of the oil market. He believed that part of the explanation could be that there are fewer oil specialists trading in the market now than before, so that too much emphasis is placed on short-term variables and macroeconomic noise.

– Something is not right in the oil market. If you look at it from above, there is a reopening in China, maximum oil production in almost all countries, and an end to the supply of oil from strategic storages in the USA. Important variables for the oil price are not observable at the moment and will probably come to light during the next quarter, said Haugnes.

In an interview with DN in the spring of 2022, shortly after the war had broken out, Andurand believed that the oil price could rise to 150 dollars. Andurand believed that Russian oil would not return to the Western market under Vladimir Putin, and that only parts of the oil would be able to be redirected to countries such as China and India.

– It can take a long time for the market to price in such things, as few understand how the market dynamics will be going forward. The oil price will rise quickly when the market players realize that there is a physical shortage of oil, Andurand said.

Still Russian oil

According to Financial Times Russia’s oil exports were 8.3 million per day in April, the highest in three years. That was mainly driven by imports from China and India, which imported 2.1 and 2.0 million barrels respectively, according to the IEA. At the same time, Russia’s income from oil exports fell by 27 per cent, compared to the previous year.

After the invasion of Ukraine, there were more than Andurand who believed that Russian oil production would fall dramatically. A year ago, the International Energy Agency (IEA) estimated that Russian oil production would fall to an annual average of 8.7 million barrels per day, but last month Russia’s oil production was almost 11 million barrels.

Half a year ago, the EU and the G7 countries agreed on a price ceiling of 60 dollars for Russian oil. The purpose has been for Russia to receive lower incomes, but for the oil to continue to reach the market, so that inflation stabilises.

The price ceiling means, among other things, that providing services to the oil transporters – such as insurance, financing and technical assistance – is prohibited if the oil has been sold for more than the limit that has been set. Although China and India have no import restrictions, the companies that ship Russian oil to them could still be affected.