Saturday, September 17, 2016

Oil demand to pick up next year

Bloomberg:

Pierre Andurand, the hedge fund manager who foresaw oil’s plunge in 2014, says he expects a “hefty" decline in global crude stockpiles next year that should drive prices higher.

Oil demand should start accelerating by year’s end, and outside of Saudi Arabia the prospect for production growth among OPEC members looks bleak, Andurand said in a monthly investor letter obtained by Bloomberg News. His London-based Andurand Commodities Master Fund managed $1.2 billion in August, according to the letter.

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The fund “remains bullish as we patiently wait for our investment thesis to play out," he said. “Once we have run through the global excess inventory, onshore visible inventories will draw and oil prices will move higher."

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“We see 2017-2020 as still having the potential for much higher prices," the money manager said. “After 2020, there is a high risk that electric vehicle penetration will change the oil market forever."

Interesting point on electric car penetration changing the oil market. I am not so sure yet. Range is still and issue with these cars and I am still not sure the mineral sector can provide enough cobalt and other metals to produce millions of electric cars per year. 

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