Oil: strong, but not permanent price increase

In breve

The sharp increase in oil prices (+29% year to date) has been one of the key factors behind rising fears of global inflation overheating and has led to speculations about the start of a new commodity super-cycle.
Focal Point

Highlights:

  • Year to date, Brent prices have been up by nearly 30% to US$ 67/bbl, one of the fastest increases in decades. The climb is set to continue well into summer, and we project prices to peak at just below US$ 75/bbl by the end of Q3.
  • A quick global recovery will push up demand strongly, against a tightly disciplined supply of OPEC+ and a slower than in the past pick up in US shale production. Stronger supply and growth normalization is then set to gradually drive prices back within the range of US$ 60 to 65/bbl, which suits both US and most of OPEC producers.
  • Energy equities’ recent outperformance still has legs. Higher oil prices will push earnings further up keeping valuations attractive. The ESG score is a negative but the cyclical upturn and low positioning bode well at least in the short term.
  • Oil sector credit looks cheap to fundamentals but will remain hindered by its poor ESG profile especially as the ECB might decide to underweight Oil bonds in its purchase programs.

Download the full publication below

Focal Point ǀ Oil: strong, but not permanent price increase

Also interesting

Picture

© Generali Investments, tutti i diritti riservati. Questo sito web è fornito da Generali Investments ed è considerato come una comunicazione di marketing e una promozione finanziaria riferita ai prodotti e servizi delle società elencate di seguito, appartenenti al Gruppo Generali: Generali Investments Partners S.p.A. Società di gestione del risparmio, Generali Insurance Asset Management S.p.A. Società di gestione del risparmio, Generali Investments Luxembourg S.A. e Generali Investments Holding S.p.A. (nel prosieguo, congiuntamente indicate come Generali Investments). Inoltre, il sito può contenere comunicazioni di marketing e promozioni finanziarie di prodotti e servizi di società appartenenti alla piattaforma multi-boutique coordinata da Generali Investments Partners S.p.A. Società di gestione del risparmio, nello specifico di Generali Global Infrastructure, Sycomore Asset Management, Aperture Investors LLC., Plenisfer Investments SGR, Lumyna Investments e Generali Real Estate S.p.A. Società di Gestione del Risparmio