Pierre Andurand and his hedge fund had a tough start to the year. Andurand Capital Management shed 8% last month due to the slump in oil-and-gas commodities, according to a report from the Financial Times. Last month, crude oil temporarily rallied after the U.S. and Iran appeared on a path toward war. However, once tensions died and concerns about coronavirus and global growth emerged, crude prices went in reverse.

Pierre Andurand and Crude Oil

Andurand’s hedge fund is very unique because it specializes in crude oil. However, with that specialization comes the natural risk tied to downward prices. The hedge fund lost money in 2018 and 2019.

The London-based firm had superior years in 2014 (with gains of 38%) and 2016 (with a return of 22%).

According to reports, the fund has underperformed due to its exposure to falling diesel prices. The firm had bet that high-sulfur crude oil would fall in value due to the new global shipping rule, IMO 2020. That has not played out – despite concerns – due to refinery efforts to mix fuels to increase supplies. In addition, refiners had produced less high-sulfur crude, which led to a rally in demand.

Right now, the big question for crude oil centers around OPEC production. At a time that U.S. shale output is near record highs, the world’s largest oil cartel must decide whether it wants to cut additional production to boost prices. According to reports, Russia – which isn’t an OPEC member – is speaking with Saudi Arabia about ways to reduce output. However, these nations’ economies are extremely reliant on crude production for their national balance sheets. OPEC and Russia are set to meet in Vienna to discuss a new agreement in March.

Related: Oil-Rich Norway’s Government Pension Fund Slashes Exposure to… Oil Production