- An oil hedge fund is looking at 51% loss as its bets on energy prices turns sour, Bloomberg reported.
- Pierre Andurand's hedge fund had delivered sky-high returns to its investors from 2020 through 2022.
- Andurand gave a bullish outlook for oil prices earlier this year, arguing that the commodity could hit $140 per barrel.
A hedge fund managed by Pierre Andurand took a stunning loss in the first six months of 2023, with its flagship fund down 51% amid this year's drop in energy prices.
The Andurand Commodities Discretionary Enhanced Fund makes leveraged bets in the energy space and fell 7% in the first three weeks of June, according to an investor letter seen by Bloomberg. The hedge fund has likely lost about $750 million so far this year, based on reports that it manged about $1.5 billion in December 2022.
While it's unclear as to what trades drove the big losses, it likely was related to bullish oil bets as Andurand had given a forecast earlier this year that oil prices would soar to $140 per barrel by the end of 2023.
"I think oil will go upwards of $140 a barrel once Asia fully reopens, assuming there will be no more lockdowns," Andurand said, adding that the "market is underestimating the scale of the demand boost that it will bring."
Instead, oil prices have steadily dropped by about 12% this year, with WTI Crude Oil trading at just under $71 a barrel on Friday. The commodity price has been driven by cheap Russian oil flowing through the global commodity market, a weaker-than-expected economic reopening in China, and high inventory levels.
Oil prices are down 46% since the commodity peaked at $130 per barrel in the immediate aftermath of Russia's invasion of Ukraine in March 2022.
The massive drop for Andurand's hedge fund comes after it delivered sky-high returns for its investors from 2020 through 2022. The hedge fund was up 154%, 87%, and 59% in 2020, 2021, and 2022, respectively, according to Bloomberg.