- Advertisement -
- Advertisement -

Will oil rally in 2016?

- Advertisement -

Stockholm (HedgeNordic) – Franck Nicolas, head of investment and client solutions at Natixis, believes that there is light at the end of the tunnel for oil and in a recently published market commentary he writes that “oil may have bottomed out”.

Nicolas argues that the price per barrel is suffering from weak global trade and Iran’s return to the group of oil-producing countries, but also from the particularly mild climate since the end of last year. He also sees correlation building between equities and energy prices.

“Accordingly, financial markets are reducing risk, taking this fall in the oil price as the self-fulfilling prophecy of a sluggish global economy lacking momentum. Strong correlation is thus building between equities (including those in the eurozone) and energy commodity prices”, Nicolas states.

Nicolas sees devastating consequences for oil-producing countries “as they watch revenue collapse and face investors withdrawing capital, on the grounds that emerging central banks will have to introduce more accommodative policies to support the clear slowdown in local activity”. This has translated in an increased correlation between emerging market currencies and the price of Brent, where a fall in the price of oil translates to a stronger US dollar versus emerging market currencies, according to Nicolas.

Nicolas however believes that there might be a turning point around the corner and that concerted action could resume within OPEC to get better control of production, especially as the strategy from Saudi Arabia to undermine US shale oil is working, Nicolas argues.

“Indeed, at these prices, several countries will be tempted to buy social peace by rebalancing their budgets with an income boost”, he concludes.

Picture: (C) TebNad – Fotolia.com

Subscribe to HedgeBrev, HedgeNordic’s weekly newsletter, and never miss the latest news!

Our newsletter is sent once a week, every Friday.

HedgeNordic Editorial Team
HedgeNordic Editorial Team
This article was written, or published, by the HedgeNordic editorial team.

Latest Articles

First Non-Swedish Family Office Investment for Protean Small Cap

Stockholm (HedgeNordic) – About one year after the successful launch of their long/short equity fund Protean Select, Pontus Dackmo and Carl Gustafsson introduced a...

Atlant Högräntefond Leads Peers on Third Anniversary

Stockholm (HedgeNordic) – Around mid-March 2021, Swedish hedge fund boutique Atlant Fonder launched a UCITS-structured fixed-income fund investing in Nordic corporate bonds, drawing from...

Rhenman Welcomes Brummer & Partners Sales Veteran

Stockholm (HedgeNordic) – After close to 18 years as an institutional sales professional at Brummer & Partners, Tom Josephson is set to join healthcare-focused...

Untapped Potential in Symmetry’s Small-Cap Portfolio

Stockholm (HedgeNordic) – Small-cap-focused hedge fund Symmetry Invest has achieved an annualized return of around 20 percent over the past five years and over...

Navigating Asia-Pacific’s Transition to Sustainable Growth

Stockholm (HedgeNordic) – Emerging markets in the Asia-Pacific region, such as China, India, Indonesia, the Philippines, Thailand and Vietnam, have experienced significant economic expansion...

The Performance of US Equities in Election Years Over the Last Century

By Daniel Ung, Kartik Chawla, and Jędrzej Miklaszewski – SPDR: The 2024 US presidential election is on the horizon, and investors are keen to...

Allocator Interviews

Latest Articles

In-Depth: Emerging Markets

Voices

Request for Proposal

- Advertisement -