Did have time to publish for some time as working a PM for multiassets UHNW accounts - here s a suite of slides I ve produced this summer for a bull call on Oil - found that the trade is quite asymetric.
More importantly benefit from macro, micro and positioning supporting factors, typically the configuration that lead to powerfull moves.
The background was to try to find what could move upward investors inflation expectations - well we probably found one of the factors----
The title of the research piece is called "Crude Bears bewares". BB screenshots are from August but the theme is still very much fresh. I v added a selection of slides - but cover the key points.
Conclusions are
- Oil demand is as strong as ever with EM driving a large part of the growth - EM cyclical upswing will only reinforce it
- US inventories (laggging indicators as cheapest place to stock) are declining fast - should converge soon twrd 5 years average
- 2014 bear forced E&P to cut significantly capex : will be challenging to add production growth
- US shale oil = only growing suppply BUT seems to be already past its peak in term of MB/D of growth (rig productivity going down fast)
- The US oil production likely to peak soon as a result
- Oil price should increase in the next 12 months to reflect supply/demand imbalances
- It will contribute to increase inflation expectations of investors in the US which is probably what the FED wants before raising rates i.e behind the curve, on purpose
- Therefore a long crude/energy equities (ex-shale) should be an interesting exposure to balance long duration exposure of traditional multi asset portfolios
- Suggest a mix of crude futures, XOP US Equity, OIH US Equity and Stoxx 600 Oil Explo.
