The man who read it right

– French trader and specialist oil hedge fund manager Pierre Andurand saw it coming from early February.

His call – and a lucrative one at that – was that there would be a massive slump in oil prices, to the point of unprecedented negative prices for “black gold”.

“There is no limit to the drop in prices ... negative prices are possible,” the founder of Andurand Capital tweeted on 20 April.

Hours later the price of a WTI barrel slid into negative territory for the first time, having stood at $60 (about R1 021) in New York a few weeks earlier, dragging Brent crude down in its wake.

Simultaneously, the Andurand Capital fund was reaping returns of more than 150% for having correctly second-guessed the market so early – before the coronavirus-induced global panic saw air traffic grind to a virtual halt along with much economic activity.

It was a spectacular coup for former Goldman Sachs trader Andurand after he made a market bet diametrically opposed to the one most traders had at the start of the year, when conventional wisdom said the oil price would take off.

Bloomberg recently named his firm as one of the top dozen to emerge strongest from the coronavirus crisis, in a study that found three quarters of 1 500 funds assessed had lost money on markets hit by the pandemic.

“When I feel there is a big change in terms of supply and demand I analyse it in detail and I try to quantify its impact on prices,” Andurand, a 20-year finance veteran, said.

“Very soon” he became convinced Covid-19 would prove “hard to stop” and that there was “a strong probability of confinement measures the world over”.

He anticipated the chain reaction that broke as demand collapsed, leading to giant surpluses – catastrophic for producers reduced to paying buyers to take supplies off their hands.

Andurand, 43, then bet on prices going back up slightly after output cutbacks.

Andurand Capital manages around $800 million across varying risk levels. And this year was not the first time the Frenchman had beaten the house on oil.

He did the same back in the 2008 financial crisis as his newly launched fund pulled off a 209.5% gain, followed by another 55% the following year.

He also made strong gains in 2014 when oil prices halved. It wasn’t all plain sailing. In 2012, months before he would close his first fund, things went sour – as they would again in 2018 and 2019. In those years, Andurand booked losses of between 15 and 20%.

The son of civil servants, Andurand, from the southern town of Aix, spent part of his childhood on Reunion Island, trading is for him akin to “competitive sport – the return replacing the stopwatch”.

– AFP