New York: As oil traded at the lowest levels since the financial crisis, hedge fund manager Pierre Andurand told investors that crude prices may fall to $25 a barrel or even lower in the first quarter.

Andurand, whose hedge fund has gained 8 per cent this year, said he expects global supplies to expand by 1.6 million barrels a day, and in Organisation for Economic Cooperation and Development nations by 900,000 barrels a day in the first half of 2016. Demand growth around the world will slow and begin to decline around 2022, he said.

“Such large builds could lead to a test of maximum storage capacity,” Andurand, who’s been betting on falling prices since last year, said in a client letter. “This should result in significantly lower crude prices,” wrote Andurand, who predicts that benchmark West Texas Intermediate prices closer to delivery will be much cheaper than those to be delivered at later dates, he said.

Oil prices, which fell below $35 a barrel today, have plunged by two-thirds since June 2014 amid a worsening global supply glut. The drop has continued in December as the Organisation of Petroleum Exporting Countries abandoned output limits at a meeting this month and a stronger dollar made commodities traded in US currency more expensive outside the US

Andurand said there is a large probability of Iranian production returning to the market in March or April starting at 400,000 barrels to 500,000 barrels a day, according to the letter, a copy of which was obtained by Bloomberg.

WTI for January delivery fell 33 cents, or 0.9 per cent, to $34.65 a barrel at 3:37pm on the New York Mercantile Exchange. The contract dropped to $34.29 earlier today, the lowest since February 2009.

Andurand’s firm, Andurand Capital Management, manages $615 million out of London. His hedge fund, which posted a 38 per cent gain last year, has risen 8 per cent this year through Dec. 11, a person with knowledge of the returns said. The hedge fund industry has posted a 0.6 per cent gain this year, according to data compiled by Bloomberg.

Andurand’s former hedge fund, BlueGold Capital, which managed about $2.2 billion at its peak, had generated a 240 per cent return over four years. That fund closed in 2012 after losses the previous year.