Publications: Notes at the Margin

Biden/Birol Foil Andurand (May 28, 2024)

 

Commodities trader Pierre Andurand has abandoned oil for copper and cocoa. In his view, oil no longer offers a great risk/reward, while copper and other commodities do. The resulting loss of support from the commodity speculators he influences will put downward pressure on oil prices.

 

The strategic reserve crude oil release in the spring of 2022 in response to Russia invading Ukraine explains the change in the market’s attractiveness and Andurand’s decision. Oil refiners and traders learned that governments will augment supplies during a disruption but will not offer financial support to companies whose hedges “blow up” during sharp price increases. This knowledge has eliminated the panic buying once associated with disruptive events that helped make oil speculation by Andurand and others extremely profitable.

 

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