- As Europe’s gas prices fall, “there’s no more fear of an energy crisis,” Pierre Andurand told the Financial Times.
- After his energy-focused hedge funds saw big gains, the trader closed all his natural gas positions.
- “Now that Europe is getting used to living without Russian gas why would they ever go back?”
Russia’s energy gamble has failed as gas prices in Europe have crashed and are set to stay low, according to top commodities trader Pierre Andurand.
The founder of Andurand Capital, which has earned a reputation for correctly predicting energy market moves, has closed out his firm’s natural gas positions, betting that last summer’s price spike is unlikely to repeat as Europe adapts to life without Russian supplies amid President Vladimir Putin’s war on Ukraine.
“I think Putin lost the energy war,” he told the Financial Times. “If gas prices stay here there will be much less worry about inflation and interest rates rises. There’s no more fear of an energy crisis.”
He added, “Now that Europe is getting used to living without Russian gas why would they ever go back?”
In August, gas prices in Europe surged above 300 euros per megawatt hour after Russia cut off deliveries of natural gas via its Nord Stream pipeline in retaliation for Western support for Ukraine and its sanctions on Moscow.
Prices for electricity also spiked, and officials warned of energy rationing as a supply crisis loomed ahead of the colder winter months.
However, between a warmer-than-usual season and increased supplies from the US and Qatar, gas prices have since collapsed and are sitting at around 54 euros per megawatt hour today.
“I think it was a massive miscalculation over who had the leverage by Putin, in the same way he miscalculated how Ukraine would fight back and the West would be united,” Andurand told the FT. “Russia has lost its biggest customer forever, and it will take at least a decade to bring enough pipelines [to redirect those gas sales] to Asia. Once Russia can only sell gas to China, Beijing will be in a position to decide the price.”
But while he thinks gas prices will stay low, he predicted oil prices are poised to spike. Oil prices dropped too much earlier and they could reach $140 a barrel later this year, energized by China’s reopening after years of zero-COVID policies, he said.
After cutting back on his oil bets in the second half of last year when prices were still falling, he increased his positions in mid-December.
Andurand Capital, responsible for $1.4 billion in asset management, has made significant profits since 2020, when the pandemic first brought down oil prices. The trader’s Commodities Discretionary Enhanced fund rose by 650% in the three years since.