France-based asset manager Carmignac Gestion is buying petrochemical-related stocks for its Portfolio Commodities fund and says oil is its most bullish commodity in 2016.
Michael Hulme, manager of the fund, says he believes a decline in US shale oil production will lead to a rebound in prices.
“With US exploration and production capital expenditures budgets slashed for 2016 and the rig count continuing to fall we believe we will see meaningful production declines this year from the US shale basins,” he said, in a statement.
Hulme does not expect increased Iranian oil production to push down the oil price. Although the lifting of sanctions on Iran allows it to sell more oil in global markets, “the country has, according to our sources, already been exporting a considerable part of its excess production via Iraq”, he said.
Not everyone thinks the current rally in the oil price is sustainable. Art Berman, a petroleum geologist and consultant to energy companies, recently predicted the price rally that began in mid-February will collapse because inventories of crude oil are too large and demand is too weak.
The markets have seen considerable volatility in the past few days. Early this week, the price of a barrel of Brent crude fell 3% after Iran said it wanted to reach pre-sanction production levels before freezing output.
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