One Of The World's Biggest Oil Hedge Funds Just Liquidated All Its Longs

Tyler Durden's picture

Earlier in the week we shared Pierre Andurand's hedge fund note blame-casting his fund's dismal drawdowns on "CTA flows eclipsing the gradual improvement in fundamentals."

The market sell-off is missing the larger picture, he proclaims.

“Market participants remain extremely focused on micro developments like US crude inventories while the big picture has been telling us a different supply story for quite some time,” he wrote. “In fact, the gradual tightening of crude oil spreads has led to the release of expensive onshore and offshore inventories globally.”

So what could be driving prices lower? Andurand looks at the algorithmic traders and places blame on their non-economic outlook for the price movements. “Without consistent and significant draws invisible onshore inventories, we remain stuck in a trendless and choppy market with CTA flows eclipsing the gradual improvement in fundamentals,” he wrote, pointing to an oddity.

Of course, the permabullish trader had a great year in 2016 (up 22.1%) as oil soared...

Pierre Andurand

But, in what now seems like a moment of supreme irony, we noted earlier that 'it was a very ugly night for the Andy Halls, Pierre Andurands and other crude longs' as WTI flash-crashed.

And, courtesy of Reuters' David Gaffen, we may have found one major culprit (among many we suspect) for the recent rapid collapse in crude oil prices)...


As Reuters reports,

Pierre Andurand, who runs one of the biggest hedge funds specialising in oil, liquidated the fund's last long positions in oil last week and is running a very reduced risk at the moment, a market source familiar with the development said.


The fund, Andurand Capital is a renowned oil price bull and has been reducing its positions gradually over the course of 2017, the source said, while adding that it remained fundamentally bullish on oil.

It has been a tough few weeks for Andurand...As Mark Constantine tweeted, a few weeks ago Andurand was predicting oil prices to hit $70 later this year

But, of course, Andurand is not alone, in fact it is safe to say that virtually every other commodity trader is on the same side of the boat:

Hedge funds and other big money managers amassed a record number of bullish bets on Brent crude last month, according to the Intercontinental Exchange Inc.... having traded in a narrow range for most of this year, oil posted its biggest two-day selloff since June last week. Oil inventories in the U.S. have recently hit a record high in a sign that the massive glut that has depressed prices for more than two years is still plaguing the market. The U.S. Energy Department expects American oil production to rebound past 9.7 million barrels a day in 2018, breaking the record output level set in 1970.

Should the oil drop continue, given the massive surge in open interest, we suspect Andurand will not be the last to capitulate...


Of course the hope that the capitulation is over has sparked a BTFD off the overnigth flash crash lows... WTI back above $46...


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NugginFuts's picture

Second screen from the left - there's your career, buddy.

rwmctrofholz's picture

Ha.  That's funny shit.  I love it when commenters use the stock photos to supplement their points.  Good stuff.

Yukon Cornholius's picture

Looks like oil trading now is much the same as it was in 1992. Dopey white guys with bad haircuts and baggy dress shirts.

Haus-Targaryen's picture

I wonder how long it is before OPEC pushes Venezuela into a civil war bribing their oil production down to more or less zero?

Everyone wins, except Venezuela, but they are already losing anyways. 

Mother Of All Bomb's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do...

HowdyDoody's picture

Andurand - yet another (ex-)Goldman Sachs 'hero'.

Middle_Finger_Market's picture

The only truly constant is change.


Adapt or die. 

Troll Magnet's picture

2nd screen from the left?  Maybe he shorted?  Explains that smirk on his face.

AVmaster's picture

And how is this bad for anyone but the pocketbooks of the oil investors and camel jockeys(that want to kill us, by the way)....


Fuck em, let the dump commence...

Ghost of PartysOver's picture

I said it before and will say it again.  For the foreseeable future oil will trade up to 55's bringing the marginal high cost producer back into the production equation then back down to the 35's squeezing the marginal high cost producer out of the equation.  All together now, sing loud, sing proud "May the circle be unbroken"

PrayingMantis's picture


... I have a feeling that American firms hoarding trillions offshore don't care much about crude inventories ...



... "US corporations stashed $2.4 trillion outside the country last year according to fourth-quarter company filings compiled by the Swiss bank UBS.

With $124 billion, Microsoft hoarded the most money offshore among America's biggest 500 companies. Apple was second in the UBS ranking with nearly $110 billion kept abroad."

... and if President Trump would like to MAGA and bring back the stash home, that would help a bit, I guess ...

more here >>>



earleflorida's picture

crude oil price 70 yrs history -1950-present

who's fooling who?

so what's changed in 70 yrs[?] other than ussa hegemony priced-out- of-the market!?! 

HooRAY4rSIDE's picture

Something tells me that 'LISA' (from 'Wall St'), isn't gonna be snorting lines of coke off his limp dick this evening...

T-Wall's picture

If they hit MAX Pain, its time to buy!!!

Praetorian Guard's picture

Anyone see the move "The Crash"? Sort of a B movie, but the premise is great. The Fed is behind the bullshit, which we always knew. Sort of a great twist on the the whole tanking the markets conundrum... the shit roles this year, in my opinion...



Come join us for FREE as ALL are welcome, start your own blog, classifieds, charts, much much more, all at no cost!!!

Doom Porn Star's picture

"I wonder how long it is before OPEC pushes Venezuela into a civil war bribing their oil production down to more or less zero? "


Inflation is purportedly running at approximately 741% in Venezuela presently.  I'm not sure if it matters how much oil is or is not being produced if some other issues are not meaningfully addressed, that inflation rate one of them...

Solio's picture

Turn that computer upside down, NOW!

rockstone's picture

Get those traders back in here........

Privyet_Jet's picture

It was funnier the first time

assistedliving's picture

a few weeks ago Andurand was predicting oil prices to hit $70 later this year


agree.  $10k on the table.

any takers?

earleflorida's picture

note: during the oil-embargo's of the 60s & 70s there was no shortage of oil/gasoline...

it was all fabricated...

the ussa/canada/mexico inventory was maor than adequate...

in both cases it was a ruse... a  fucking joke!



now then? the question we should be asking ourselves --- is/was NAFTA a good deal, or did national [energy] security trump some or all of the shortfalls?

it seems to me that 'NAFTA' is a canard! but, and i mean a traitorist 'BUTT`deal of monumental proportions--- baby bush let China into the WTO with 'favour'd nation status', exactly 'three [3] months' after '911' on dec.11,2001--- and here we are 15+/+ yrs. later fighting for our economic life!!!

assistedliving's picture

earle, i hate Bush.  more than those rapist Chinese.   like Mexicans tho.

Rex left the throne to be SoS for one reason only : Save EM in Russia.  

whats ur point?



spastic_colon's picture

oil is the new gold.......the red headed step child of the markets

_RRR_'s picture

secure this shit, Hudson

Calculus99's picture

Maybe if he made his charts square rather than rectangle he'd get better results. 

Rectangle charts are dreadful for analysis, they must be square, then the real movement and swings can be seen. 

enosenose's picture

what a load of crap bull shit... bet he is still long. 

Falconsixone's picture

Long rockets pay with a bang.

WillyGroper's picture

engineered scarcity coming with the A21/2030 energy economy.

A. Boaty's picture

Invisible onshore inventories? WTF?

Son of Captain Nemo's picture

Count me in!... To go with 20,000 Butt Coin(s)!!!'s picture

"Zee cabbage does not run away from zee corn-beef."  Pepe Le Pew

Pasadena Phil's picture

So long as the commodities market is driven almost exclusively by the speculators, everyone is just gambling. Last year, ZH reported that 92% of outstanding oil futures contracts were held by speculators (who cannot take delivery). There is just too much speculation activity across the global economy. There is no way for the economics to play out so long as there is too much cash chasing too little. At some point, fundamentals won't matter for anything. Might as well be investing in bitcoin.

2_legs_bahhhhhd's picture

Everything we purchase is effected by these rats, wether it's food, energy, metals, soon there will be a spot price for water and weed. In a free market economy, the producers and buyers set the price, not some shit stain sitting behind a row of monitors.

Good thing we have regulators to make sure there's no fuckery going on.

Son of Captain Nemo's picture

"Good thing we have regulators to make sure there's no fuckery going on."

Thumbs up and "Amen" to what you just said about the lies and manipulation that are allowed to keep running this "Casino"!

I don't know why I keep using the descriptor of the House Cards called the Central Bank(s) a "Casino"?...

As it denigrates the business of "CASINO(s)"!

Pasadena Phil's picture

Ironically, this hedge fund manager probably has the fundamental story right for being long oil. The problem is that he is speculating on oil prices via futures contracts based on what? Fundamentals? This is largely a one-sided trade. When that delivery date approaches for everyone at the same time,  I imagine everyone tries to roll over their positions at the same time in the same way. If they can't, they dump and eat shit. It looks like we are seeing the big dump. Nothing to do with fundamentals or any reality. Just bad gaming strategy.

2_legs_bahhhhhd's picture

Hedge funds....a pack of wolves looking for an easy meal. Fuck them. This "new economy" horse shit is based on making money by clicking a mouse. None of the douce bags has ever lifted a shovel, or got any dirt under their nails. The only tool they've ever held is their boss's dick.

KSoze's picture

While all that may be true, would you kindly show us your way of shoveling ourselves into financial freedom?

2_legs_bahhhhhd's picture

i can't reveal that information, it's proprietary. I will tell you though, no matter how hard you work, you will never achieve financial freedom as long as someone else can determine the value of your labour, or the currency you are paid in.

LeftandRightareWrong's picture

Socialism doesn't allow traders to mess around with stuff people need and use.

venturen's picture

unlimited free money as far as the eye can see. Just put it in a holding company, loan it to yourself and when the trade turns....liquate the company.

Why does anyone even bother making stuff anymore!

Swamp Yankee's picture

Time to fill the oil tank and buy beer.


Long on cheetos.

brooklinite8's picture

Good to see an article where longs are closing their positions

Velocitor's picture

ZERO exposure to oil.  Sounds totally reasonable... after all, it's not like there's any possibility whatsoever of global instability which could drive the price of oil up, right?

ebear's picture

LOL!  In today's market, global instability would probably drive the price down.

Jacksons Ghost's picture

Start monkey hammering the Spoof button, you douche!

Expat's picture

Ha!  I called this yesterday when I saw the market tank.  Pierre did this twice already. 

Of course, Pierre still has several hundred million to his name, houses in London, Paris, Singapore, and elsewhere.  And enough gas money to fill his Veyron.

overmedicatedundersexed's picture

I buy my oil on Amazon, cause they deliver free...

now that's innovation and pure genius, right bezos ?you self important fuck