Oil Analysis – Yearly Outlook

Andurand Fund Sees Oil at or Below $40 for Up to Six MonthsJanuary 21, 2015 —

(Bloomberg) -- Pierre Andurand, whose hedge fund gained 38 percent in 2014 from a well-

timed wager that oil prices would fall, expects a further slide to $40 a barrel or lower that

could last for as long as six months.

West Texas Intermediate could plunge to the high $30s from $46.47 and brent crude could

slip to $40, the manager of the London-based hedge fund firm wrote in a letter to clients

that was obtained by Bloomberg News.

Oil has fallen by more than half since June as the U.S. pumped at the fastest pace in more

than three decades and demand growth slowed. Andurand Capital, which trades oil and

other commodities, outperformed its peers after it began taking short positions -- a bet that

prices would decline -- in oil in late September.

“We do not believe that oil prices have yet found a floor,” Andurand wrote.

Andurand, who runs the $400 million Andurand Capital Management, OUTLOOK: wrote that

low prices will lead to a decline in oil supply as projects to produce the commodity are

canceled. When demand outgrows supply, expect a rebound in prices to more than $60 a

barrel later this year, he wrote.

Georgiana Brunner, a spokeswoman for Andurand at Greenbrook Communications in

London, declined to comment on the letter.

Brent gained 2.5 percent to $49.21 at 10:04 a.m. in New York amid signs that prices near a 5

1/2 year-low are slowing drilling in the U.S. – TO BE CHECKED

Next Run

In a Dec. 1 interview with Bloomberg News, Andurand, 37, predicted Brent crude would

decline to $60 a barrel by the end of 2014 and reach $50 early in 2015. The price ended last

year at $57.33.

Andurand wrote that a pullback in oil production will “plant the seed for the next oil bull

run” in 2017 to 2018, RETIME / DELAY ??? with the possibility that oil prices will reach an

all-time high by the end of the decade.

The average hedge fund across all strategies gained 1.4 percent in 2014, according to data

compiled by Bloomberg. The Andurand fund’s 15 percent gain in December made whole

investors who lost money when his previous venture, BlueGold Capital Management, shut in

2012.

BlueGold Capital, an oil-focused commodity fund Andurand managed from 2008 until it

closed, lost 34 percent in 2011. Andurand offered legacy BlueGold investors a chance to

invest in his new hedge fund without paying performance fees until they recouped losses.

July 20, 2015

What changed since then?

US / OPEC Output remains HighStockpiles remain HighIran Oversupply: 500K Bbls/d more, will increase in the next 12 MonthsIncreased capacity in: % of PRODUCTION; % of DEMAND?New Drills: CHECK how slowApril/May small Rally Revival of slowing OutputDemand: CHECK evolution of Demand; probably slowing / remaining slow

Oil trader Andurand sees U.S., OPEC supply capping pricesMay 15, 2015 —

GRANT SMITH and STEPHANIE RUHLE

NEW YORK (Bloomberg) -- Oil supply from both OPEC and U.S. shale drillers is set to

expand later this year, preventing further gains in prices, according to hedge fund manager,

Pierre Andurand.

Oil prices will remain “relatively low” for the next two years as a rebound in recent months

allows U.S. producers to revive slowing output, said Andurand, who generated a 38% return in

2014 from wagering that oil would fall. At the same time, members of the Organization of

Petroleum Exporting Countries including Saudi Arabia, the United Arab Emirates and Kuwait are

raising their production amid concerns demand is nearing its peak, he said.

“We’ll be in a market where both U.S. production will go up and OPEC,” Andurand said in a

Bloomberg Television interview with Stephanie Ruhle at the Commodity Debate conference in

New York on Thursday. “It’s going to be difficult for prices to go much higher in the short term.”

Andurand in March told clients that U.S. benchmark oil prices would drop to around $30/bbl in

the following two months as crude stockpiles expanded in Cushing, Oklahoma, the largest oil-

storage hub in the U.S. While government data showed that inventories did keep growing at

Cushing until April 17, U.S. oil prices have surged to about $60. West Texas Intermediate oil fell

16 cents to $59.72/bbl in electronic trading on the New York Mercantile Exchange at 12:10 p.m.

Singapore time Friday.

Iran Return

Andurand started his $450-million Andurand Capital Management hedge fund in 2013, the year

after the firm he co-founded, BlueGold Capital, shuttered with losses of 34%. Andurand had

previously traded oil at commodity firm Vitol Group.

BlueGold had managed about $2.2 billion at its peak, having almost tripled its value by correctly

betting on higher oil prices in the first half of 2008 and then reversing the strategy. The fund

started trading in February 2008 and returned 209% that year, 55% in 2009 and 13% in 2010.

Besides the potential for more supply from OPEC’s “core” Gulf members, there’s scope for

additional output from Iran, which would deepen the current surplus, Andurand said.

Iran could restore 500,000 bpd of oil exports within six months of an agreement on its

nuclear program, and increase shipments by 1 million a day within 12 months, Andurand

said.

Iran’s exports have been cut by about 50% since 2012 to roughly 1 MMbopd because of

sanctions that the United Nations, U.S. and the European Union have imposed over its nuclear

program, according to the International Energy Agency. The nation is in talks with six world

powers to reach a final accord to lift sanctions in exchange for curbs on the Islamic Republic’s

nuclear program, with a deadline of June 30.

“That will hit the market when inventory levels are already high and the market is already

over-supplied,” Andurand said.

Strategy and Timing

EOY for lagging prices – Increased due to Iran and small Rally-provoked drilling projectsSlowness of the Slump TBD Long End Dec for January Onwards

AcceleratorLong On Oil-Producing companies when Long Option:Exxon MobilTotalPetrobras