Vitality hedge fund eyes US$200 oil on potential export ban

LONDON: The prospect of restrictions on Russian power exports may ship oil costs above US$200 (RM836) per barrel, based on Westbeck Capital Administration.

The London-based hedge fund is amongst a cadre of commodities-focused funds betting on an prolonged rally for crude after Russia’s invasion of Ukraine, at the same time as a possible Iran nuclear deal paves the way in which for Tehran to return to worldwide markets.

In a letter to traders, Westbeck stated a long-lasting impairment to Russian oil exports coupled with demand destruction will most likely drive costs into the US$150 (RM627) to US$175 (RM732) vary, and will overshoot above US$200 (RM836) – practically double its present value.

It stated that spike would possibly in flip gasoline rampant inflation, doubtlessly forcing the Federal Reserve to slam the brakes on charge rises.

“Oil and fairness markets will not be priced for such a state of affairs though, in our view, the chances are excessive,” the agency stated in its letter. “We consider traders ought to take into consideration insurance coverage insurance policies in opposition to that consequence.”

A managed for Westbeck, which is managed by Jean-Louis Le Mee and William Smith, confirmed the contents of the letter. The Westbeck Vitality Alternative Fund was up an estimated 3.8% in February and 5.4% up to now in March, boosting this yr’s good points to 17.4%. The agency manages US$380mil (RM1.6bil) in property.

Within the occasion of a recession induced by a surge in crude costs, Westbeck stated oil seems just like the superior funding to grease equities, in step with the 2008 world monetary disaster. Inside shares, the agency stated it favors oilfield service corporations.

The Bloomberg Commodity Spot Index, which tracks power, metals and crop futures, has surged to its highest in additional than seven years. Brent crude was buying and selling at above US$110 (RM460) a barrel yesterday, nearing the height it reached in 2014.

The 23-nation OPEC+ coalition, led by Saudi Arabia, confronted a yawning hole in provides when it gathered on Wednesday. — Bloomberg


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