Andurand Sees Oil Demand Soaring As Much As 4MM b/d In 2023

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by Tyler Durden
Thursday, Dec 29, 2022 - 11:00 PM

When sitting down to make forecasts about 2023, perhaps the biggest wildcard is what happens to the price of commodities in general, and oil in particular, after China fully reopens following its current "post covid-zero" hiccup which may lead to even more chaos but which will promptly reverse in a few weeks time.

Here, estimates vary, but few are as optimistic as iconic oil hedge fund trader Pierre Andurand, who said that global oil demand could soar as much as 4% at some point next year if the world fully emerges from Covid restrictions.

In a series of overnight tweets, Andurand said that consumption has been lagging long-term trends and, boosted by a switch to oil from gas, may increase by 3 million to 4 million barrels a day in 2023. As a reminder, Andurand's main commodities fund has crushed the competition this year, rising about 50% in 2022.Β  Andurand is among several fund managers who made huge profits betting that supply-chain disruptions and Russia’s invasion of Ukraine would lead to jumps in oil and other commodities.

Andurand (who in March incorrectly predicted that oil would hit $200 by year-end as Biden's drain sends the SPR to record lows) caveated that the oil demand surge will be limited by the increasing popularity of electric vehicles, which are displacing about 600,000 barrels a day of fuel use, but net demand will still be more than enough to offset this drop.

Having been bearish on oil for much of 2021 and 2022 despite its relentless march higher, Wall Street banks now widely expect that crude prices, trading near $82 a barrel in London, will advance next year as sanctions squeeze Russian supplies.

That said, the bullish mood isn’t unanimous and as Bloomberg notes, veteran analyst and PIRA founder Gary RossΒ at Black Gold Investors tweeted on Wednesday that oil market balances are β€œweak” and will deteriorate further in early 2023 as US storms curb refinery operations.