Pierre Andurand, one in all oil’s most distinguished hedge fund managers, mentioned the present reluctance of vitality firms to put money into new manufacturing meant $300/bbl was “not unimaginable” inside a number of years.
Andurand, who’s typically espoused bullish views, mentioned in a sequence of tweets on Sunday that concern in regards to the influence of electrical automobiles on future demand was limiting funding in initiatives with lengthy lead occasions.
“So paradoxically these peak demand fears would possibly deliver the biggest provide shock ever,” he wrote. “If oil costs don’t rise quick sufficient, $300 oil in a number of years isn’t unimaginable.”
The hedge fund supervisor, who runs oil-focused Andurand Capital Management LLP, additionally went in opposition to the traditional view that triple-digit oil costs will dampen demand progress.
“So no, $100 oil is not going to kill the financial system,” he wrote. “And we want +$100 oil to encourage sufficient investments exterior of the U.S.”
A spokesman for Andurand declined to touch upon the tweets, which have been later faraway from Andurand’s Twitter account.
His feedback on demand echo these of Saudi Oil Minister Khalid Al-Falih, who earlier this month recommended that costs might rise farther from their present stage near $75/bbl with out doing financial harm.
“We have seen costs considerably larger prior to now, twice as a lot as the place we’re as we speak”, and the worldwide financial system has the power to soak up costlier crude, Al-Falih mentioned. In 2008 Brent crude rose to almost $150/bbl, earlier than crashing.
Andurand was amongst prime commodity hedge fund managers who met with Al-Falih in July in London to debate the state of the oil market. The Organization of Petroleum Exporting Countries and its companions plan to take care of their manufacturing cuts this 12 months, which have helped to spice up oil costs.
Andurand posted a close to 10% drop within the first two months of the 12 months as his fund stumbled in opposition to a background of zig-zagging vitality costs, in line with individuals acquainted with the matter. The fund made cash in March, one of many individuals mentioned, asking to not be named discussing personal knowledge.
He launched his hedge fund in 2013 and it has been optimistic yearly since.
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