Saturday, October 15, 2016

Top oil fund manager says oil poised for multi year run

Seeking Alpha:


Pierre Andurand, founder of Andurand Capital Management LLP, has set his eyes on $70 oil in 2017. His track record of calling the recent oil downturn has been pretty spot on. 


Following the article in September, WTI dropped from $45 to less than $30 in just four months. Andurand turned from a bear to a bull earlier this year, predicting a "multi-year bull run." Since then, oil prices have steadily increased despite some people's persistence that oil will retest the $30 or even the February lows.


People who continue to focus on the U.S., Russia, and OPEC are ignoring the other half of the supply chain. In addition, countries within OPEC are inflating their production figures. We see the declines in Venezuela offsetting all production growth in OPEC, and if Saudi Arabia decides to cut it would only increase the current deficit further.

The longer prices stay down below $50-$60 per barrel the less investment that will go into developing new production. Oil is a depleting asset and the 94 million barrels per day that the world uses has to be replaced or prices will eventually go up to stimulate new production devlopment. I am playing the oil price through best in class shale developer EOG Resources and National Oilwell Varco, Both of which are up since being added to the portfolio. 

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