Where are prices of oil and related assets headed after this year's rally? Higher, we think.
Crude oil has risen nearly 15% since the Organization of the Petroleum Exporting Countries (OPEC) agreed to cut oil output. We believe that the deal has put a floor under
oil prices , and that this will help bolster prices of related assets. Skepticism on the implementation of the deal abounds, as OPEC has had a poor record of keeping to production quotas. But we think that OPEC members are likely to stick to the agreement this time, as the cartel appears keen to rein in global oversupply and stabilize prices. We see oil trading in a range of $50-$65 a barrel throughout 2017
. The pace of an ascent to the top end of this range will likely depend on how quickly the global oil market moves from oversupply to a deficit. We see this happening in the first half of 2017. A key risk to this scenario would be increased production from Libya and Nigeria-two OPEC countries exempted from the agreement.
Oil equities and debt
off-shore projects
Outside the oil complex
Global Investment Outlook
U.S. cyclical equities.
Treasury Inflation Protected Securities ( TIPS )
adjust their inflation expectations
opportunities in commodity exporters
high yielding debt from EM resource exporters
Terry Simpson
, CFA, CAIA, is a multi-asset strategist for the
BlackRock Investment Institute
. He is a regular contributor to
The Blog
.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
